Due to the New Hampshire governor signing and approving the nation's first strategic BTC reserve bill, Bitcoin, which had just erased its gains from the May Day holiday, surged again, jumping from the 95k level to around 97k. Currently, Bitcoin still has not escaped the resistance zone at $98,000. Although there is strong support between $93,000 and $98,000, this support has also become a resistance, as some investors are concerned about the risk of a U.S. economic recession.
Since 1945, U.S. interest rates have exceeded 4.5% a total of seven times, besides now, of which only twice did not see an economic recession. Once, although there was no recession, there was still a significant economic downturn, and only once did the economy continue to rise while interest rates were high. Therefore, from a probability perspective, there is a 14.5% chance that the economy will continue to rise, while there is an 85.5% chance of an economic downturn. So, when the price of Bitcoin allows passive long-term holders to break even after being stuck at high levels, there will indeed be pressure, especially with the Federal Reserve's interest rate meeting tomorrow morning creating a demand for safe-haven sentiment. Currently, Bitcoin's 7-day average volatility is at its lowest level in 563 days, like holding one's breath. This kind of calm usually indicates that a big market movement is about to happen, and the FOMC meeting will be a trigger point. Additionally, the negative funding rate of perpetual contracts indicates that short positions have the upper hand. If there is any positive news after the meeting, shorts may be squeezed, and prices could rise rapidly. Conversely, if there is negative news, declines will also be aggressive.
Bitcoin may experience short-term fluctuations with spikes up and down during the early morning, and it is advisable not to hold short-term positions overnight. I believe the key point is whether a higher high (above 98,000) can be established today. If a higher high is reached, maintaining the bullish trend, then it is highly likely to test 100,000 and reach the next bullish target of 102,000-104,000. If a higher high cannot be established, it may just be a pullback after an UTAD, leading to a continuation of the decline post-FOMC. In simple terms, 98 is the watershed; if it is taken down, we can look for higher levels. If it does not break 98, the bearish outlook remains. Ethereum has just touched the lower edge of support on a small scale pullback and has begun to rebound again. The lower edge is also the long position indicated yesterday. If you have been following this viewpoint of mine, the current long positions have already made a considerable profit of about a hundred points. Next, I will focus on the 1850-1880 range for potential short positions. Based on the current momentum, the probability of a breakout is relatively low. Although Ethereum is upgrading today, it is estimated to still be hard to drive upward.
Finally, Sweet Dream mentions that the current logic for the rise in the crypto market is still externally driven. For instance, the reason for today's morning rise was that Asian friends learned about the Bitcoin state strategic reserve passing, coupled with media promotion both domestically and internationally, leading to a certain level of FOMO sentiment. However, there is not only the Federal Reserve's interest rate meeting ahead but also a U.S. Treasury auction. This week, the U.S. will auction 3-year, 10-year, and 30-year government bonds. In the current high borrowing cost environment, selling bonds will likely reduce the amount of money in the market. If the auction is hot, it indicates strong demand and stable interest rates, and the market will be fine with little volatility. But if the auction does poorly, with weak demand and soaring interest rates, the market may panic, worrying about potential issues with U.S. debt. How serious could the consequences be? The bond market could plummet, U.S. stocks would also be affected, and risk assets like Bitcoin would suffer as well, exacerbating dollar fluctuations. However, it’s fortunate that recent U.S. Treasury auctions have been relatively smooth, with at least the 10-year bonds selling quite well. However, there is a phenomenon to note: domestic buyers in the U.S. are very enthusiastic, while overseas buyers show less interest. This means that U.S. Treasuries will draw more funds from U.S. investors, potentially leading to a decrease in the money available in the richest U.S. investment market. Moreover, there are also 30-year U.S. Treasuries to sell, and with liquidity tightening and less money available, the resulting short-term market pressure could be substantial. This implies a compression of the upward space for the crypto market. Personally, I am maintaining a cautiously optimistic attitude. That’s it for today’s article; everyone, please subscribe so we can achieve financial freedom together in this bull market.
