Regarding ETFs, last week, Bitcoin spot ETFs had a net outflow of $799 million, while Ethereum spot ETFs had a net outflow of $119 million.
Is it a bull or a bear market right now? Where is the bottom? When can we bottom out?
I think this is something many people want to know. The weekend was relatively calm, but since yesterday afternoon, the price of Bitcoin has been continuously falling, breaking the 200-day moving average again, with the lowest point dipping to the $80,000 mark. Ethereum also briefly fell below $2,000 again.
First, let me say a side note: In the past couple of days, everyone has probably seen news about market makers' methods of exploiting retail investors being exposed, and it even got a retweet from Binance founder CZ.
In my view, the exposure of these issues is actually a good thing. Altcoins are synonymous with 'hundred-fold myths.' The wealth creation bubble of ICOs in 2017 and the collective frenzy of DeFi and NFTs in 2021 are essentially a Ponzi aesthetic of 'stories are worth more than code.' Now, the monthly pressure of billions of dollars from new coins corresponds to the drained retail investor funds.
When BTC proves 'the strong get stronger' with a 58% dominance, the K-line of altcoins has long been reduced to an EKG controlled by market makers—every pulse is a signal of escape. Once projects unlock, they dump; VC fundraising immediately cashes out—this is not an investment market, but the final purge of a capital game.
Now that the market makers' methods of exploiting retail investors have been exposed, it allows retail investors to clearly know which coins cannot be bought. It also serves as a warning to all project parties to clean up some bubbles. I hope altcoins can return to their original state; only when the tide goes out do we know who is swimming naked.
Returning to the initial question: Is it a bull or bear market now?
First of all, the beneficial policies that Trump has continuously implemented since he took office have not actually driven an increase in liquidity. Even if we ignore Trump's campaign benefits for Bitcoin, the price drop of BTC should be the price anchor point after liquidity was introduced through spot ETFs in the previous phase.
The current market is likely very similar to the internet boom before 2000. Emerging industries have stimulated market development, with large amounts of capital entering the internet sector, greatly boosting valuations, leading to bubbles. Once the economy enters a recession, the challenge will be to kill valuations and clear bubbles.
Saying that we are currently in a bear market doesn't hold true.
Bear markets are often accompanied by significant and rapid declines, usually around 50%. We have not reached that point yet; at most, we may be in the early stage of a bear market, provided there is a recession. If there is no recession, we may just be in a stage of significant withdrawal and washout as liquidity recedes and user funds exit.
Indeed, we can see a lot of selling data in the U.S. stock market, and the liquidity is indeed poor now. However, in the cryptocurrency industry, due to greater transparency, there are currently no obvious signs of withdrawal for mainstream stablecoins like USDT and USDC. Therefore, we do not belong to a traditional bear market; a drop of 10% to 20% can still be seen as a short-term consolidation, fluctuation, and pullback. Of course, we cannot exclude the possibility that it is the early stage of a bear market.
After all, the time since the decline is still a bit short. Therefore, considering all economic conditions and historical cycles, we are currently neither in a traditional bull market nor entering a bear market. Instead, we are in the prosperous and bubble stage of an emerging industry. When can we bottom out? I still maintain my previous judgment: the bottom is around 7,000 to 7,500; currently, I won't buy altcoins. This is why I firmly believe in buying at 7,000 to 7,500; just look at the chart.
In the chart, we can see that the trends of BTC and the Nasdaq are very similar. Generally speaking, if it is a pullback, fluctuation, and consolidation, the Nasdaq usually drops about 20%. Now it's down 10%, which suggests there is still about 10% space left. For Bitcoin, that would be around $75,000. However, considering that Bitcoin's drop is likely to exceed that of the Nasdaq, Bitcoin still has strategic reserves and spot ETFs. Therefore, gradually building positions between $70,000 and $75,000 might be the right move.
