The recent analysis of the cryptocurrency market pullback and subsequent trend outlook is hoped to help everyone understand the current market situation and medium to short-term direction:
Current market pullback situation and reasons
Recently, after Bitcoin reached a new high of $124,000, due to the U.S. wholesale prices (PPI) exceeding expectations, investors became more cautious about when interest rates would cool down, leading to a shift in market sentiment towards conservativeness and downward pressure.
In just 24 hours, Bitcoin fell over 5%, triggering large-scale forced liquidations, with a market value of over $1 billion being cleared.
The total market capitalization of the crypto market has dropped by about 6.7%, from $4 trillion in July to about $3.67 trillion in mid-August.
On that day, market trading activity actually increased, indicating that although selling pressure was strong, there was still ample market participation and liquidity.
Subsequent trend analysis and observation points
Is the pullback a healthy correction?
The market generally believes this pullback is a 'healthy consolidation' and not a terminal reversal. The overall trend still leans towards bullish.
Is Bitcoin expected to return above $120K?
Technical support signals indicate that Bitcoin is forming a bullish pattern of 'higher low,' with a chance to challenge the $122K high again.
At the same time, some analysts believe that if the technical pattern (such as a bull flag breakout) continues, Bitcoin may rebound to $135K.
Investor sentiment shift and currency performance
The focus of the market may shift from Bitcoin to alternative coins (altcoins), especially if Bitcoin's market dominance decreases, and funds flow into liquidity increases, potentially triggering a 'altcoin season.'
Recently, some alternative coins such as Chainlink, Ethereum, and XRP have shown significant gains, indicating that some funds have adjusted their allocations.
Dollar trend and macro environment
The Dollar Index (DXY) is nearing the bottom. If it rebounds in the future, it could suppress liquidity and curb risk asset prices, creating pressure on the crypto market. However, if it remains low, it will benefit the continued strength of risk assets.
Comprehensive judgment
Timeline Market trend expectations
Short term (1–2 weeks) Continued volatility and consolidation, possibly hovering around $120K or accelerating to correct to $110K. If negative factors continue and it falls below $110K, deeper corrections should be watched out for.
Mid-term (within this month) If the support holds strong, a second wave of rebound is expected, potentially even challenging the highs again; if the bullish pattern continues, alternative coins may take the lead in the attack.
Medium to long term (Q3) If the macro environment improves, the dollar retreats, and market confidence recovers, we can expect to see higher performance, especially if altcoins perform outstandingly, the 'coin season' will become more evident.
Overall, the current market pullback is a short-term correction, and the overall trend still leans towards bullish. Key observations are whether Bitcoin can hold above $120K, whether the dollar can rebound, and whether alternative coins can bring new momentum ahead of time.
