Black Monday has finally arrived. The S&P 500 index opened down 3.5% on Monday, marking a 20% decline from its historic high two months ago. The drop in the S&P 500 also signifies the end of a bull market that can be considered unprecedented in many ways.
This is the second fastest drop among 14 bear markets since 1945, with the US stock market losing $9.5 trillion in just one month. Wall Street traders believe that the sell-off may worsen, as current valuations are still higher than levels seen during past economic recession crashes.
In the previous daily report, we shared the underlying reasons why BTC did not immediately follow the drop, and that a level-312 drop might occur in a few days. The corrective behavior in crypto happened yesterday, and this topic is not over. Continuing on, there are two main reasons for what happened:
1: This drop in BTC is a delayed reaction to short-term risk aversion. On-chain data does not reflect the fleeing behavior of large holders; it is more likely a panic sell-off by retail investors.
2: When the US stock market drops to a price acceptable for bottom-fishing, more funds will sell BTC to supplement high-quality assets in technology stocks.
Now let's look at today's closing price of US stocks, which stabilized with a year-on-year increase of +0.10%. Today's fear and greed index: 23, up +5 compared to yesterday. While funds are fleeing, a small portion of funds is bravely bottom-fishing. Large holders and institutions have temporarily shown no movement; before the tariff war kicks in on April 9th, it should belong to a narrow range of rebound rises. The market's psychological expectation of fear has been almost exhausted yesterday; after all, Trump can cause an increase just by releasing a favorable expectation. A rebound will occur, but going long still carries risks.
Key point: It's still advisable not to bottom-fish. Currently, after the negative news has been released, it is still not a good opportunity for bottom-fishing because:
April 9th is a turning point, with a possibility of a drop: if BTC goes below 72000 and it matches a pre-set psychological expectation price, it is suggested to consider entering with a small portion. After breaking below 68000, consider entering boldly. It is recommended to short BTC above 80000, with stop-loss set around 72000.
Although the decline in the crypto market is not targeted, it is a correlated response to the global decline in risk assets. The signal of the trend: the long-term outlook remains bearish, just like last week's prediction that a 312 in the crypto circle might occur. Is it possible to see another 519? After all, in the current tense economic environment, a historical shift is quietly approaching, and the biggest constant in this shift is recession...
04-08 Tuesday
