The Federal Reserve meeting is about to start. Will there be an unexpected rate cut this time? The outcome is surprising! Ethereum has broken previous highs! Have institutions increased their positions? After reviewing the on-chain data, I can't help but break into a cold sweat. Let's take a look with Shuqin~
First, there is the upcoming Federal Reserve meeting, which could change all current trends. Besides announcing the rate cut results in June, they will also release the future interest rate dot plot. This dot plot is the Fed's most direct expectation of when and how much they will cut rates in the future, and each time it causes quite a stir.
A direct example is the interest rate dot plot released on December 18, which hinted at slowing rate cuts, causing Bitcoin to drop from 110,000 to 92,000 in a day, a decline of over 15%. Next Wednesday night, the Federal Reserve will release guidance for future rate cuts again, and it looks like it could be a bit unfortunate.
Let's first talk about the results of this meeting. Shuqin is 100% certain that there will be no rate cut, and I am also 100% certain that there will be no rate cut in July. So don't expect any hints about a rate cut in July; instead, you will receive news that there will be no rate cut in July, which is a small negative signal.
The biggest uncertainty for this meeting is whether to cut rates in September and how many times rates will be cut this year, which relates to the future trends in the cryptocurrency market. We will see this in next week's interest rate dot plot. Currently, Wall Street has a 50-50 expectation for a rate cut in September, but I think the dot plot may hint at no rate cut in September, which would create a significant negative impact.
The reason for not lowering interest rates is that, as we discussed last time, inflation in the U.S. could continue to rise in the coming months. Many Wall Street analysts expect inflation to rise from around 2% to 4% or even 5%, so don't expect rate cuts in September; it may not happen even by the end of the year, which would catch most people off guard.
The price increase caused by Trump's tariffs has just begun to transmit to the consumer end, and it will continue to rise, which will decrease corporate revenues and lower U.S. stock valuations. The cryptocurrency market is closely related to the U.S. stock market; if the latter experiences a correction, Bitcoin won't be spared either.
Just take a look at the holdings of the Bitcoin whale Spoofy, and you will see that he has been wildly selling during the recent price increase, offloading 30,000 Bitcoins worth 3 billion dollars. Don't think that institutions will rush in to buy Bitcoins at over 110,000; they are not foolish. Why didn't they buy at 70,000 but want to chase high at 110,000? Those still entering the market now are FOMO retail investors, rushing to give institutions the opportunity to take profits.
If you look at the data, the profit and loss ratio for long-term holders is now close to a peak, which has historically been a signal of a top. The current candlestick chart gives me the same feeling as previous tops, which shows distribution at high levels, forming a multiple top. This is actually a relatively good time to exit because there is often a significant correction afterward.
You have seen the macro environment; the Federal Reserve has been slow to cut rates, inflation and unemployment caused by tariffs, and the slowdown in U.S. corporate profits are all evident. On the other hand, Bitcoin has already risen 60% from the bottom, and I don't see any macro positive factors to support continued growth; instead, there will be a series of negatives ahead, which makes it hard to convince me to chase highs now. Patience for a month or two will surely lead to a significant drop.
In the short term, 110,000 is a significant resistance level. We are looking at around 106,700 first; a rebound should occur here. Those who are aggressive can go long to 108,000 and then continue shorting to 104,000. For a more stable approach, wait for a stronger support above 104,000 before going long. Currently, we should take profit on our short positions around 106,800. Congratulations to those who traded with me~
Additionally, ZK is also a very good shorting target because it has received further negative news.
Originally, he was supposed to unlock 20% of the tokens on June 18, which remains unchanged. However, according to the latest distribution plan, starting from July, he will unlock 167 million tokens every month, which is equivalent to 4% of the current circulating supply—quite significant, and it will be 4% every month.
We have shorted multiple times around 0.058 in the past two weeks. It just rebounded quite a bit yesterday, and we shorted again directly. You see the price of this coin dropping rapidly. We update these operations in real-time every day, feel free to check it out if you're interested.
Alright, let’s continue. The on-chain data for Bitcoin is shocking; the inventory on exchanges has plummeted vertically, with a large number of coins being bought and withdrawn from exchanges. This is actually somewhat unexpected, as the buying pressure is quite strong.
What surprises me even more is that with such strong buying pressure, Bitcoin's price hasn't risen much. Efforts without results—does that sound familiar? That's a direct quote from financial pioneer Wyckoff, and this is actually a relatively weak signal. Because although there are people buying on-chain, especially some traditional financial institutions, there are also many whales in the crypto space selling, like Spoofy, who are distributing their holdings at high levels, resulting in a large buying pressure but no significant increase in price.
If you look at the on-chain data for Ethereum, it is even more intuitive. ETH has broken through 2,800, but there is no additional buying pressure on-chain; it's very calm. Therefore, this wave of price increase lacks momentum and is not suitable for chasing highs. These signals are very important for our judgment.
Additionally, I will pay close attention to the Michigan Consumer Confidence Index released at 10 PM on Friday and the one-year inflation expectations. These data are crucial because they not only give us an expectation for next Wednesday's Federal Reserve meeting but also provide more insights into U.S. employment and inflation data, helping us assess potential recession risks. So, interested ones, remember to check it out; I will also update this data synchronously, don’t forget to follow me~