"The quality of decisions depends on the information you have and your ability to process that information. — Ray Dalio, Founder of Bridgewater Associates -- (Principles)"
This week, Bitcoin's price fell below $100,000, and I believe this decline is a healthy and effective correction, which is common in a bull market. In past cycles, the crypto market has often experienced significant pullbacks, and these adjustments help to digest the risks of excessive speculation and lay the groundwork for future gains.
The structure of Bitcoin's price trend remains intact, with no substantial changes, still above the trend line, so the previous view is maintained!
The realized price of short-term holders (STH-RP) — the actual cost basis for short-term holders has risen to approximately $85,357, which provides some support for the market. Short-term holders typically take profits when prices rise, which may lead to selling pressure, but market behavior may change with the entry of more institutional investors.
----During a bull market, traders like to buy when Bitcoin's price reaches the actual cost basis of short-term holders, as it is a good time to increase positions.
Long-term Bitcoin holders typically expect to realize at least ten times their investment before selling large amounts of Bitcoin into the market. In contrast, short-term holders lack this patience and usually choose to take profits after achieving a 20% to 40% gain.
Since the US stock market peaked a few weeks ago, the S&P 500 index has fallen more than 4%, which is viewed as a slight sell-off. This pullback can be seen as a "healthy correction," as the index successfully tested the 50-day moving average, although it briefly fell below it and is currently in a rebound state. Meanwhile, the width of the 50-day moving average has fallen to oversold levels, indicating a normal adjustment in the market.
The US dollar index has reached a new high for the year. A stronger dollar will negatively impact global net liquidity, thereby suppressing risk assets. When the dollar strengthened in early 2022, the stock market was under pressure, while during the stock market bull run in 2023, the dollar weakened. As we enter 2024, the dollar remains positively correlated with risk assets, but this week the dollar reached its highest level since 2022, causing a market crash.
In addition, the US Securities and Exchange Commission (SEC) has approved the first Bitcoin-Ethereum hybrid spot ETF, which is expected to launch in January 2025. This marks a significant milestone for crypto assets entering the mainstream investment space.
With the Trump administration about to take office, market regulations on cryptocurrencies may become more favorable. There is an expectation of more positive policies emerging, which could bring new growth opportunities to the market. However, we cannot be complacent and should pay attention to future changes in the Federal Reserve's interest rate cut strategy and the potential impact of the macro environment (global political environment and inflation-employment environment) on the crypto market.
Note: All content represents the author's personal views and is not investment advice. It should not be interpreted in any way as tax, accounting, legal, business, financial, or regulatory advice. You should seek independent legal and financial advice, including advice regarding tax consequences, before making any investment decisions.