The weekend market has arrived. The recent drop in the market can be said to be one of the largest corrections since the treasury bull market began.
Bitcoin (BTC) fell from a historical high of 124400 to 116700, while ETH dropped from nearly its previous high of 4788 to 4374. But the performance of altcoins has been quite absurd - slow to rise and the first to fall.
It has fallen for three days; it really is a consistent wash trading method - it rises during the day and washes back at night.
Altcoin players are seriously hurt, but the worst off are still the HeYue faction.
Altcoins have always been 'amplifiers' in the history of the crypto space - they rise sharply and fall hard, equivalent to giving BTC leverage, but at least they don’t have the risk of liquidation. Previously, with abundant liquidity, mainstream coins would rise first and then altcoins would catch up, but this time, due to ETFs, coin stocks, and dilution of newly issued chain on assets, the uniqueness of speculation has disappeared, and the altcoin season has directly turned into 'altcoin sacrifice'.
The driving force behind this is the inflation data, which is increasingly stimulating.
The latest July PPI surged directly from 2.6% to 3.7%, an increase so exaggerated that Powell probably saw his blood pressure spike. What’s even more concerning is that this is just July’s data; with Trump's tariff policy kicking in August, inflation is likely to rise further.
Now the question arises - why was Tuesday's CPI unremarkable, but Thursday's PPI exploded?
The reason is simple: PPI is a cost indicator at the production end, while CPI is a price indicator at the consumption end. Production costs rise first, and after a while, they will be transmitted to the consumption end, so PPI serves as a 'warning light'; once it lights up, CPI is likely to follow suit and rise.
In this case, will the Federal Reserve still cut rates in September?
From the perspective of the interest rate market, the probability of a rate cut is still higher than that of no cut, mainly because employment data is still weakening. However, this time's high inflation has somewhat cast a shadow over rate cuts, which may lead to increased market volatility in the short term.
The 'special meeting' at 3 AM, and next is the Jackson Hole annual meeting scheduled by Powell - August 22. This is the most important meeting of the Federal Reserve each year, essentially determining the policy direction for the next six months.
So next week may enter a 'waiting for the shoe to drop' mode, and trading volume will significantly shrink.
The underlying logic of Bitcoin's rise and fall: just watch M2.
The rise and fall of Bitcoin actually has nothing to do with metaphysics; it is closely related to the global money supply (M2).
Historically, when M2 rises, Bitcoin often follows with a sharp rise one to two months later; when M2 shrinks, Bitcoin is likely to pull back.
Now that M2 has ended its six-month rising phase, it has started to slightly stagnate or even decline, so BTC is likely to maintain a consolidation phase, and only when the next wave of 'water release' occurs may a new round of main rise begin.
The bottom support strength of Ethereum
In the long run, I still have confidence in ETH because many institutions use fiat financing to hoard coins and won’t sell easily. The inventory of ETH on exchanges is decreasing, indicating that whales are buying and taking it away, which is usually a positive signal.
In the short term, pay attention to the strong resistance at the 4800 level; as it approaches, consider taking profits or even lightening positions for a reversal.
Additionally, most #ETH is in a staked state, and unlocking requires 5-10 days, so next week will be a key moment for the selling pressure test.
Key technical levels
BTC: As long as the lower neckline doesn't break, the bull market pattern remains, and a rebound can be attempted; if it breaks and doesn't recover, it may form a double top, so be cautious.
ETH: Pay attention to the 4800 resistance level and the on-chain unlocking situation.
When trading coins, don’t set rigid profit targets for yourself; this will only increase your stress and lead to chaotic operations in uncertain times.
Going with the trend is the way to go:
M2 liquidity → Dare to act
Consolidation phase → Wait patiently
In a bull market, corrections are not scary, but a lack of planning is. Don’t easily go all-in on altcoins, and don’t fantasize about getting rich overnight with HeYue. There will always be another round in the market; preserving capital is essential to wait for the real main wave.
The bull market is not over yet, we have plenty of time. Don’t let short-term fluctuations scare you away; our opportunity has just begun.
I'll stop the discussion here! If you're still unclear about the direction in the crypto space, it might be better to layout together with me; wait for you, otherwise in the next wave, you might find yourself on the other side.
