Don't worry about not having friends on the road ahead; there are like-minded individuals on the investment path! Good afternoon, everyone! I am the Coin King of the Coin Victory Group! This morning, Bank of Japan Governor Kazuo Ueda released the "strongest hawkish interest rate hike signal," delivering a heavy blow to the crypto market!
Click the link to watch the video: https://www.bilibili.com/video/BV14LS2BYEJc/
Once the "strongest hawkish interest rate hike signal" was announced, the probability of a rate hike in December soared to 70%, and in January next year, it even jumped to 90%! As soon as this news broke, U.S. stock futures plummeted by 1%, and Bitcoin suffered even more, breaking the 90,000 support level and crashing down to 85,500 in an instant. Many brothers who chased the rise were likely pressed down to the floor!
This drop had long been anticipated; I repeatedly warned that "Japan's interest rate hike will trigger a chain reaction," but unfortunately, many people did not take it seriously. What’s more alarming is that this is just the appetizer; the subsequent panic selling will continue to ferment! Surely someone will ask, "What does Japan's interest rate hike have to do with the crypto market?" The answer is simple: the long-term low interest rate of the yen has made it a "cash machine" for global capital. Hedge funds often borrow yen to exchange for dollars to invest in U.S. stocks, and a large portion of the funds in the U.S. stock pool comes from this type of capital!
But now Japan is going to raise interest rates, and the interest on borrowed yen is skyrocketing, doubling the cost! How can these institutions bear it? They can only quickly sell U.S. stocks, exchange for dollars, and repay yen. As the funds are drained from the U.S. stock pool, it will drop, and Bitcoin, as the "little follower" of U.S. stocks, has always fallen harder than it rises; this is the chain reaction!
Some say, "Once the interest rate hike is confirmed, the negative turns into positive," which confuses the Bank of Japan with the Federal Reserve! The Federal Reserve's interest rate hikes are cyclical, allowing capital to hedge; however, the long-term low interest rate of the yen has trapped a large amount of capital, making it difficult to withdraw! Moreover, the yen's interest rate hike is a "one-time blow," forcing capital to repay debts without time to restructure portfolios, leading to forced asset sales, which naturally puts pressure on the market! And this is just the beginning; the chain reaction has only just started! If Japan really raises interest rates in December, the Federal Reserve will have a headache— the exchange rate difference between the dollar and the yen will only get larger, and the outflow of funds from U.S. stocks will only accelerate! To give you a straightforward example: previously, a loan of 10,000 yen only required 500 dollars to repay, but now it takes 1,000 dollars!
If the Federal Reserve wants to protect U.S. stocks, it must follow suit with interest rate hikes, but the probability of a rate hike is basically zero now; if it lowers rates, the exchange rate difference will be even more absurd! Therefore, the hope for the Federal Reserve to lower rates in December has basically been extinguished by Japan's actions—without this favorable support, confidence in the crypto market has directly collapsed by half, making a new round of declines a certainty!
Having vented about the news, let's return to the charts! Currently, Bitcoin is weakly consolidating around the 86,000 level. After a sharp drop, it's normal to take a breather, but don't be fooled by the "recovery"—the bear market logic hasn't changed at all; the main theme is still decline. What we need to do now is find the right entry point for short positions and not act as the bag holder! The market has two possible scenarios, let's break them down one by one:
Scenario 1: The sharp drop mode is activated! Today's recovery will definitely not exceed 88,000, and from below this level, it will "take off"—first breaking 85,000, then testing 83,500, followed by a drop to 80,600, ultimately heading towards 74,000 to build a range, step by step down!
Scenario 2: Break through 88,000 and enter a large fluctuation! In the short term, it may touch 93,500, but that’s about it! After consolidating above 93,000, as soon as it breaks below the 90,000 round number, a new round of bear market declines will immediately start, and those trapped will only suffer more!
With these two scenarios laid out, the operations become very clear: Scenario 2 cannot be confirmed in the short term, but Scenario 1 can already be acted upon! 88,000 is the "line of life and death"; since it can't break, today’s 87,000-87,500 is the golden entry point for short positions! If it breaks below 85,000, continue to hold; reduce positions at 83,500, and add positions again if it breaks below 83,000, targeting directly at 81,000!
Let’s highlight the key points again, remember them in your notebook:
Resistance Levels: Second resistance at 90,200, first resistance at 87,500; Support Levels: First support at 84,500, second support at 80,600.
You should know that Bitcoin opened December with a big bearish candle, completely giving back last week's gains, and even retesting the previous low of 84.5K—this is the "critical support" for this week! If this level is lost again, it will accelerate the decline, and there will be no stopping it! Now, this long bearish candle structure looks frightening: there is no lower shadow line for buffer, nor has there been a large bullish candle to engulf the bearish candle, making the probability of further downward movement higher than ever! The buying pressure in the market is virtually non-existent; if no one is buying, how can one expect a rebound? That’s just dreaming!
The RSI is only at 33, not yet in the oversold zone, leaving plenty of room below! If 84.5K cannot hold, it will head towards the previous dense trading area at 80.6K; if it cannot stand above 87.5K, the bears will always be in charge! Don’t fantasize about a "bullish reversal"; the current rebounds are merely opportunities for short positions! Finally, let me explain the trading strategy for December 1:
Going Long: Not recommended for now; whoever buys will just be a bag holder; Going Short: Enter directly in the 87,000-87,500 range, targeting 86,000-84,500. If it breaks below 84,500, continue to hold!
Remember, everyone, don’t go against the trend in a bear market! The thunder of Japan's interest rate hike has just exploded, and the subsequent impact is far from over! Follow the rhythm of the Coin King, find the right points to short, and even if the market falls, we can still make a fortune!
Our Coin Victory Group offers real-time market alerts and strategies for breaking even; search for "Coin Victory Group" on WeChat to join the free experience group! If you find this useful, give a thumbs up and follow us, and we’ll discuss the market changes at the first opportunity next time!
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