Thursday, April 10, 2025

Last night, U.S. stocks and the cryptocurrency market surged significantly, creating a mix of excitement and anxiety. The excitement stems from the possibility that new opportunities have arrived, while the anxiety comes from the difficulty in determining whether this is merely a fleeting rebound or the beginning of a new bull market in the form of a V-shaped reversal, and whether one should chase and enter the market.

Looking back at history, truly significant V-shaped reversals in the Nasdaq are few and far between, with the one triggered by the COVID-19 black swan event in 2020 being a typical example. At that time, the outbreak of the pandemic caused the global economy to stall, and the stock market suffered severe blows. However, driven by large-scale economic stimulus policies from governments worldwide, the Nasdaq quickly rebounded and exhibited a beautiful V-shaped trend. But aside from this unique situation, other instances of rising markets often face a second bottom or further declines afterward. For example, after the 2008 financial crisis, the Nasdaq did experience some short-term gains, but subsequently went through a prolonged period of volatile adjustment, with the process of a second bottom causing significant losses for many investors.

Looking at the current Bitcoin market, after reaching a peak on January 20, it entered a correction phase. The initiation of the trade war on February 1 undoubtedly added insult to injury, accelerating its downward trajectory. However, this is not a purely black swan event. Black swan events are characterized by their unexpected nature, significant impact, and post-event explainability, while the recent decline in Bitcoin occurred during a correction phase and was affected by the adverse factor of the trade war, not entirely without warning.

Based on the above analysis, Ye Wei personally believes that there will likely be at least a second bottom, and possibly the onset of a new round of declines. From the perspective of market sentiment, the current rise may be just an overreaction to the news of the suspension of tariffs, and market confidence has not truly recovered. Once the sentiment cools down, the market is likely to return to a downward trajectory. Analyzing technical indicators, whether for U.S. stocks or Bitcoin, the current rise lacks sufficient volume support, and the sustainability of this increase is in doubt.