Source: Talking about Li and other things
In the past two days, Bitcoin has dropped from around $96,000 to around $86,000, with an overall drop of nearly 11%. As of the time of writing this article, the daily RSI has also reached the oversold range of around 29, and it seems that everyone is still quite panicked. As shown in the figure below.
If we completely follow the historical experience, then the investment success rate in this bull market seems to be relatively low so far, because at this time in the last bull market, Bitcoin had already begun to break through its cycle high point. As shown in the figure below.
In the above data, the horizontal axis represents the progress of the bull market (i.e., the number of days), and the vertical axis shows the comparison between the yield trend of Bitcoin in this bull market cycle (i.e., the purple line) and the bull market yield trend at the beginning of the previous cycle (i.e., the light brown line).
Of course, the last bull market cycle also experienced several relatively large corrections in the process of breaking through historical highs. If we directly compare the current Bitcoin correction, the current decline in Bitcoin seems to be within an acceptable range.
1. Bitcoin’s bull market, altcoins’ bear market
But history cannot repeat itself, at most it can only be similar, because in different historical periods, we face different economic environments, policies, global situations, market sizes and other factors. Especially since this cycle, the crypto market is no longer an independent market. It has been deeply intertwined with traditional financial markets, politics and macroeconomic factors. Moreover, as more and more professional institutions get involved, it is more difficult for ordinary retail investors to control and predict market development. When the crypto market begins to be controlled by institutions, policies, and macro liquidity, it seems that some of the old cycle’s experience strategies and indicators are no longer applicable. Therefore, no one can make a 100% accurate prediction of the market’s future trends.
However, based on my personal position, at least I will continue to be optimistic about the overall market trend in the future. Moreover, Bitcoin has been consolidating around 100,000 for a long time. Since it can't go up, it may not be a bad thing to make some relatively large-scale corrections. If there are no larger-scale black swan events in the future, I think after some consolidation and correction, if we can see some new driving factors for recovery in narrative, economy or policy (this is the most important, but it is currently unknown), then it is not ruled out that the price of Bitcoin will continue to hit new highs this year.
I mainly talked about Bitcoin above, not altcoins, which seems to be one of the biggest problems facing this cycle. We have also reviewed the topic of altcoin season many times in previous articles of Hualihuawai. In this round of bull market, altcoins are actually doing very badly overall. Although some partners say that altcoins seem to have fallen to the bottom (many altcoins have fallen by more than 80%), if Bitcoin needs to be corrected next, then theoretically the situation of altcoins can only be worse (here we are talking about the overall situation, and it is not ruled out that some altcoins will rise against the trend).
In short, if we look at the overall situation of Bitcoin, we are still in the bull market (the late stage of this bull market, which is also the period with the highest stage risk). But if we only look at the overall performance of altcoins, then people's sentiment is basically the same as in a bear market.
2. Not desperate enough, not crazy enough
At present, the opinions of various KOLs are basically divided into two levels. Either they announce that the bull market has not ended and there may be new opportunities this year, or they announce that they have already escaped at a high point and the market has entered a bear market. So the leeks are even more confused. Pessimistic leeks say that the bear market has already begun. Optimistic leeks say that this is just a new correction. Anxious leeks say, I don’t know who to listen to.
The overall feeling I get from the current market is that it is not desperate enough, and even less crazy. Is it the calm before a new round of storms? Or will the market sink from here on and never turn back? People with different positions and mindsets may have different views or understandings on this.
I remember that in the article on September 4 last year (2024), we said something: The market is more often a manifestation of emotion. The reason is so simple, because human nature is like this. The market often arises in despair, breaks out in disagreement, and ends in madness. In terms of time, more than 80% of the gains often occur in the last 20% of a cycle. As for whether you can survive this 80% of the time, it depends on the individual. As for whether you can control your emotions and effectively exit in the last 20% of the time, it also depends on the individual. Anyway, for me personally, I will definitely continue to wait patiently and will not throw away the Bitcoin in my hand because of short-term panic. At most, I will continue to hold it for a few more years until the next bull market. This has basically no effect on me. A person's position management determines his mentality, and his mentality determines whether he can go a long way in this field. Learn to be friends with time, don't flutter in the long river of time. Many times, those who drown in the end are often those who can swim.
From the perspective of the market, the current possible approach is to continue to make necessary corrections, such as for a few weeks or longer, so that those pessimists completely lose hope and those anxious people begin to become pessimistic, but not to the point where they completely collapse. At this time, a few more big positive lines (or new narrative stories) will continue to make them re-enter the market to take over. In this process, only a small number of people who are patient enough, can strictly manage their positions (including risk management plans), and can strictly abide by their own trading disciplines can get money from other people's pockets under this trend and cycle. Of course, if you are already a more professional trader, you can continue to hedge through derivatives when the market falls sharply.
As for when the bear market will come, I cannot predict the specific time, but my view has not changed, as mentioned above: I will continue to be optimistic. But while being optimistic, you must also prepare your own Plan B in advance. In fact, my personal Plan B was already thought out in advance when I first decided to start investing and buying, and I have shared these several times in the past articles of Hualihuawai. For example, many people always leave messages saying that they want to follow me to buy, but in fact, this may not be suitable for everyone. To tell you the truth that may not sound friendly, first, I have no obligation to take you or trade on your behalf (because there will be certain risks), at most I will only share what I have done with some partners in the form of articles or in the group. Second, I bought a big cake and I can hold it for several years without moving or selling it. Can you? Third, I make profits and losses in my own transactions. I can only be responsible for my own profits and losses, not yours.
Including the bear market topic that many people have started to discuss recently, we actually did some personal perspective sorting in advance in several articles last year (2024). I wonder how many people still remember it? For example, in the article on July 22 last year, we mentioned: If you have just entered the encryption field and are still in a state of half-knowledge of blockchain and encryption, then our suggestion is that (starting from July 2024) the remaining bull market time of less than a year should not be messed around. If you want to participate in trading, simply make the necessary investment in BTC/ETH. If you can become a professional trader, then you don’t have to care about the ups and downs of the market, because whether the market rises or falls, you have the opportunity to make money. As shown in the figure below.
This week, many people are also paying attention to Nvidia's financial report (Beijing time February 27) and the US PCE inflation data (February 28). The market volatility will still be relatively large, but volatility often creates opportunities. Just continue to strictly manage your position based on your personal risk preference. Or let me put it bluntly. As mentioned at the beginning of this article, the daily RSI of Bitcoin has returned to around 29. In the short term, you can't actually buy it at a loss in this situation. As for how to buy or how much to buy each time? Is it a short-term plan or a long-term plan? Do you want to make a profit/stop loss plan? ... This should still depend on your own mentality and position!
Finally, after experiencing a period of prosperity and bubbles, the market will eventually usher in new opportunities and even changes. With more than 98% of the projects dying or returning to zero, the market will also usher in a new era. I also remember that in the opening article on January 1 this year, we mentioned that 2025 indicates that the crypto field may usher in or begin to enter a new era, and each of us will become a participant and witness.
Note: The original text of this article was 5,000 words, which was reduced to 2,700 words when it was published. The full version of the original text has been backed up in Notion.
