I fell asleep halfway through writing this, and the rest was written this morning, so the reading might feel a bit disjointed.


August 25, 2025:

Fundamentals:

On the macro front, the U.S. M2 has returned to pandemic peak levels, approaching 5%. At the same time, multiple inflation indicators show that price pressures are re-accumulating, with PPI rising to a high of 3.3%. This combination is very dangerous, having historically caused the financial crisis of the 1980s and the internet bubble crisis of 2000, and it is coming again.

The 3.3% year-on-year increase in PPI directly reflects the cost pressure on the upstream supply chain, and there is no doubt that CPI will also rise later. The current widening gap is because importers are compressing their profit margins to absorb tariff costs, which has not yet been significantly passed on to consumers. However, starting from the end of the year, consumers will face significant price increases, leading to continuous inflationary shocks.

In terms of U.S. stocks, Goldman Sachs' high-beta momentum stock index fell 13% between August 6 and August 19, triggering a strong rebound signal from Goldman Sachs. In this case, the probability of a rise in the following week (August 25-31) is over 80%. In terms of returns, the average weekly return is around 4.5%, with a return exceeding 11% within 30 days (by September 20).

Assuming Bitcoin's return rate is twice that of the S&P, then by September 18, after the interest rate cut, the increase could be over 20 points (reaching 135000-140000).

However, this rise is actually a manifestation of the last hurrah, as the price-to-book ratio of the S&P 500 is currently at a historical high of 5.3, exceeding the 5.1 peak of the internet bubble in March 2000. Currently, the shift of CTAs is also very rapid; they were shorting U.S. stocks at the fastest pace in four months just a week ago, but since the beginning of last week, they have been buying U.S. stocks at the fastest pace in the last seven weeks, with buying power reaching +0.4 of the one-year standard deviation, and the ratio of bullish buying to bearish selling has reached 2.4:1.

From the long-term cycle perspective, the current U.S. stock market is at the end stage of the bull market that began in 2009, with a notable sign being that the U.S. stock market is starting to enter the 'altcoin season'.

Since 2015, the 50 largest stocks in the S&P 500 have outperformed the market by 73 percentage points. The last time similar large-cap stocks led significantly was in 2000, followed by the burst of the internet bubble. Recently, Russell 2000 has been making gains; it is worth noting that Russell 2000 has not made new highs since 2021, but it has risen 6% since August, while the S&P 500 has only risen 2%, indicating that small-cap stocks are starting to take over. This process may last about 3 months, meaning that by October, the U.S. stock market could completely collapse.

Back to the market:

Just now, Bitcoin's price spiked down to around 110600.

First of all, from the perspective of the theory of market trends, since the 18th, when Bitcoin fell below 116800, the bull market has actually ended (as mentioned in the previous analysis, a 4-hour level correction is currently not allowed; if it occurs, it means the end of the bull market).

Secondly, from the perspective of naked candlesticks, the current daily level has directly formed a door down, and a evening star has appeared; at the weekly level, an evening star has also formed at the top. From a pattern perspective, it looks very bad.

Finally, from the perspective of indicators, the weekly MACD has turned, KD has crossed downward, and RSI shows a bearish divergence, all of which give a very clear signal: there is no bull market.

However, from the perspective of the long-term cycle, considering M2 and the peak of the U.S. stock market (Russell 2000 taking over), the bull market has not ended.

So how do we balance indicators and fundamentals?

My personal habit is to rely more on indicators for short cycles and more on fundamentals for long cycles. Many KOLs in the market who are good at short-term trading frequently make mistakes in trend judgment. This is not due to their technical skills but rather the limitations of technical analysis. The reason why long-term technical analysis shows limitations is mainly because the main players know what we are watching. They know we are drawing trend lines, calculating Fibonacci, using wave theory and market trend theory, and observing naked candlestick patterns. In small cycles, a few thousand points are insignificant to the main players, but if it’s tens of thousands of points, they do not want you to stay in the market, so they will release more false signals, often resulting in a single large bullish or bearish candle changing the trend.

For example, why was I determined to hold short positions last December and January? In terms of indicators, it was actually impossible to see a bearish trend, right? So by February, many people's thoughts and ideas were about going long, hoping for a reversal. However, the fundamentals did not support the market's rise, and if it dropped, in my view, it would be a significant bearish divergence.

Although the bull market has continued this year, there was indeed a weekly-level pullback at that time, lasting for 3 months.

The current situation is similar because at 8 a.m. on Monday, a weekly MACD death cross is a highly likely event. Once the weekly MACD crosses downward, the indicators will show no bullish signs.

However, there is another possibility: during the week of August 25-31, if the weekly chart directly forms a large bullish candle to engulf the bearish candle, then the MACD will escape the death cross. Yes, I know, with a weekly evening star + a daily evening star, it is highly likely that there will be a downward spike on Monday. But even if there is a downward spike on Monday, the probability of a bullish close this week is still high. You can also check if three consecutive weekly bearish candles are a low-probability situation. In most cases, after two consecutive bearish weeks, the third week tends to close bullish.

From the daily level, the current support is around 108000. Since the level of 112000 has already been breached and this area has been cleared twice, if there is really a downward spike on Monday, this line may be hard to hold, as the buying power around this price range has been almost exhausted.

Of course, Monday may not necessarily spike down that deep, because after dipping to 110600 at 3 a.m., the chips below have basically been cleared, so in some sense, the main players have no incentive to continue pushing down because shorts will also take profits. If the bull market is still ongoing, then for the main players to continue selling at the current position would actually be a fruitless endeavor.

Speaking of this, let's think about what the main players have been doing in the past month. We can easily find that the main players are cultivating retail investors' habits, specifically the habit of 'long positions cannot be held for long, but short positions can.' However, if everyone recalls the real bear market, such as the drop that started in November 2021, you will find that the situation is different from now.

There are many instances of sustained downward trends, while a real bear market usually does not have such a slow decline—just several large bearish candles followed by a period of fluctuation and rebound, and then more large bearish candles. It is a genuine selling pressure; once a certain amount of bullish positions accumulate, liquidation starts, which is completely different from the slow and gradual decline we have seen these past two weeks.

Ethereum/SOL has also performed relatively well, especially after Ethereum reached its ATH, the exchange rate of SOL has started to accelerate upwards. Currently, funds have not yet flowed into smaller altcoins, making it hard to believe that the bull market has ended. This cycle, Ethereum's exchange rate can at least reach 0.05; if Bitcoin goes to around 140,000, then Ethereum will reach around 7000; similarly, SOL's exchange rate can at least reach 0.002, so it's reasonable to estimate that SOL will reach above 280.

Many people criticize me, but even at 168, my SOL long position is still in profit; many people cannot hold on.

From the perspective of the long-short ratio, a new low was reached in the early hours, but the long-short ratio did not reach Friday's level. From the perspective of USDT dominance, the current trend is clearly heading towards the 3% level, and September is definitely bullish.

In terms of operations:

1. In holding Bitcoin long positions, at least hold until after the interest rate cut on September 18, and take profit at 136000 for 2/3 of the position. The timing for the remaining position and selling the spot will be discussed later.

2. In holding ETH long positions, at least hold until after the interest rate cut on September 18, and take profit when the exchange rate reaches 0.05 (or take profit when it reaches 6100 as well).

3. In holding SOL long positions, at least hold until after the interest rate cut on September 18, and take profit at 218 for 2/3 of the position. Close the remaining position and sell the spot when the exchange rate reaches 0.002.

September is definitely going to rise. What is unknown is how the market will move in the remaining time of August, but in any case, the market is about to start; time is running short.

Those holding long positions should be patient; the next phase of the market is more likely to trend upwards, especially with Ethereum reaching new highs; it is unreasonable for Bitcoin not to reach new highs. Once the market trend emerges, there will be no need to monitor the market closely; just take profit and exit at the corresponding positions.

It is worth mentioning that the next time Bitcoin reaches a new high, it is highly likely that there won't be any pullback, but will instead surge upwards, as time does not allow for another round of pullback.