Brothers, the market is too exciting this week! Gold just hit a new high, reaching 4381 dollars on Monday, and then suddenly took a nosedive, plummeting over 5%, marking the largest drop in nearly a decade. Even though the US CPI data was better than expected, gold still closed lower this week, the first time in ten weeks.

What does this mean? It means that market sentiment is very fragile, and any slight disturbance could trigger a frenzied escape of profit-taking. Now, everyone's attention is focused on the Federal Reserve's interest rate decision at 2:00 AM Beijing time on Thursday, which will be a key moment to determine the market direction for the foreseeable future!

1. What does the gold crash mean for the crypto space?

The flash crash of gold has reminded us: no asset will only rise without falling. When the market is uniformly bullish and leverage is high, once the wind changes, the fallout can be severe. This serves as a reminder for us in the crypto space:

Beware of liquidity risks: both gold and Bitcoin are viewed as alternative assets; the crash in gold indicates that global liquidity may be tightening, or investors are collectively withdrawing from high-risk areas. This is a warning signal for the entire crypto market.

Do not blindly chase highs: whether it is gold or Bitcoin, after consecutive surges, risks accumulate sharply. Never go all in during euphoric times, as it is easy to buy at a short-term peak.

2. Tonight's Federal Reserve decision, focus on three key points

Tonight's main event is the Federal Reserve; Old Li helps you highlight the key points:

A 25 basis point rate cut is already a foregone conclusion: the market has almost priced in this rate cut at 100%, so this matter itself is not considered a positive factor. The key is to watch the subsequent "script."

Powell's "words" are more important than rate cuts: At 2:30 AM, the press conference held by Powell is the key event. How will he evaluate future inflation and the economy? Will he question the market's expectations for subsequent rate cuts? If he shows a "hawkish rate cut" stance (i.e., cutting rates but hinting that this is the last time), the market is likely to be disappointed and fall.

Keep a close eye on the subsequent statements of FOMC voters: The speeches of two Federal Reserve chairpersons on Friday will further confirm the internal thoughts of the Federal Reserve. Whether they continue a dovish stance (supporting continued rate cuts) or turn hawkish (hinting at a pause) will directly affect market sentiment.

3. Old Li's practical strategy suggestions

In the face of such major events, Old Li gives you a few practical suggestions:

Before the decision: reduce positions and maintain flexibility. Before 2 AM, the market will be full of uncertainty. Reduce positions to a level that allows you to sleep peacefully, hold cash, and wait for direction to clarify.

After the decision: act according to Powell's "face".

If Powell "doves" (emphasizing support for the economy, hinting at possible continued rate cuts): risk assets may rebound, and Bitcoin is expected to follow suit. Consider entering in batches.

If Powell "hawks" (emphasizing stubborn inflation, hinting that this round of rate cuts is over): the market may significantly correct. Be sure to keep your hands steady and do not rush to bottom fish; wait for market sentiment to stabilize before taking action.

Core principle: do not bet on direction. We are traders, not gamblers. Waiting for the Federal Reserve to give clear signals before acting is always the safest choice.

Lastly, Old Li has one more thing to say:

The crash in gold has already shown the brutal side of the market. Tonight's Federal Reserve decision may very well become the next trigger. Protecting your principal is more important than anything else until the direction is clear. Be patient; wait for the market to tell us the answer before acting!

I hope Old Li's urgent analysis can help you see the situation clearly and maintain your mindset! Wish everyone good luck!