The latest US CPI data released in May was all below market expectations, which should have provided strong support for the stock market and crypto assets. However, sudden geopolitical negative news diluted the positive expectations. Especially after former President Trump publicly expressed increasing doubt about the Iran nuclear deal, concerns about escalating tensions in the Middle East emerged. Risk aversion sentiment suddenly escalated, and combined with the market being at a high level, Bitcoin's price quickly fell that night, momentarily breaching key support levels, resulting in increased short-term volatility.
Geopolitical interference is limited, but market sentiment is clearly under pressure.
Looking back at history, the impact of Middle Eastern conflicts on the cryptocurrency market often belongs to short-term events. Just like the Kabul incident in 2021, both the US stock market and the cryptocurrency market experienced a sharp decline but quickly recovered. From the current perspective, the core factors driving market trends remain the Federal Reserve's monetary policy and the evolution of the US-China trade landscape.
Of course, short-term emotional fluctuations cannot be ignored, especially against the background of Bitcoin's continued technical divergence; any sudden negative news could become a catalyst for market reversal.
Bitcoin technical indicators are flashing alarms, the top formation may have already begun.
The current trend of BTC is showing obvious signs of divergence. The divergence structure originally appearing on the 8-hour candlestick chart has extended to the daily level, indicating that upward momentum is waning. In terms of the MACD indicator, the daily values are approaching historical high regions, and the weekly chart also shows signs of fatigue.
From the contract data, Bitcoin's open interest has also failed to synchronize with price increases. Currently, BTC's price has returned to near the high point of May 24, but overall open interest is still significantly lagging behind last year's levels, reflecting low capital participation and insufficient upward momentum.
If the market does not experience a sharp rise in a short time—a panic-driven 'explosive surge'—this kind of divergence state is hard to break. Therefore, even if Bitcoin has a short-term potential increase of 5% to 10% (in the range of $115,000 to $120,000), it is still difficult to restore strong confidence in the market.
The current trend is more likely to be a consolidation phase at a peak, and once there is a resonant downward signal from the 15-minute level to the 1-hour, 4-hour, and then to the daily level, it will likely indicate the formation of a temporary top in this bull market.
The altcoin ecosystem is weak, with 'following the drop but not the rise' becoming the norm.
The current performance of the altcoin market is also not optimistic. Overall liquidity is sluggish, and project trends generally exhibit two notable characteristics:
Rising leads to dumping: Most short-term surges in altcoins lack sustainability, merely serving as bait for market makers to attract retail investors, often resulting in 'one-day' trends.
Bitcoin drops a little, altcoins drop three times: Against the backdrop of BTC's correction, altcoins generally experience even greater declines, indicating a lack of willingness and basic loyalty among market participants to hold coins.
In this environment, retail investors should change their operational thinking:
Align with institutions: Pay attention to real on-chain activity, total value locked (TVL), project profitability, and other fundamental data.
Avoid chasing highs: Currently, it is not a phase of widespread gains; avoid being misled by 'narratives'.
Focus on short-term trading: In the absence of clear policy implementation, hold tokens primarily for short-term trading, and avoid long-term holding of altcoins.
Operational strategy: Heavy defense, light offense, cash is king.
Bitcoin: The market is in a high-level consolidation zone, it is recommended to maintain a staggered profit-taking strategy; if a dead cross occurs between the hourly and daily lines, decisive position reduction is necessary.
Altcoins: Only suitable for small position quick in-and-out operations, focusing on blue-chip projects with strong anti-drawdown capabilities and substantial on-chain support.
Position management: Keep at least 50% cash position, waiting for a more cost-effective entry opportunity. If Bitcoin temporarily corrects below $100,000, it will be an important mid-term layout window.
Although the situation in the Middle East is unlikely to change the long-term bullish trend, in the short term, it has become a catalyst for triggering market technical divergences. The current market is in a 'high risk, low return' phase. Bulls need to be wary of the combined effects of technical risks and emotional shocks; rational operation and prudent defense are the best coping strategies under the current circumstances.