The market is holding its breath. The Federal Reserve's minutes are about to be released, and all risk assets seem to have received an early warning, initiating a phase of orderly retreat. Bitcoin has fallen below key support, Ethereum is performing even more weakly, and tech stocks in the traditional market are also declining simultaneously. This is not a coincidence; it is funds voting with their feet.
From a technical indicator perspective, Bitcoin has already fallen below the 50-day moving average. This key level, watched by countless traders, has been breached, indicating that the short-term trend may have shifted. Worse still, the trading volume is increasing, suggesting this is not just simple profit-taking, but real selling pressure being released. Ethereum's relative weakness is even more apparent, which is usually a reliable signal of declining risk appetite.
What are investors worried about? The core issue is the policy signals that the Federal Reserve may release. Although everyone knows that there will not be an interest rate hike in the near term, the wording in the minutes and the discussions among committee members could provide clues for the market to interpret future policy paths. If the minutes indicate that the Federal Reserve's concerns about inflation are intensifying, or suggest that high rates may need to be maintained for a longer period, then risk assets may face greater selling pressure.
The flow of funds has already made everything clear. A large amount of capital is flowing out of high-risk assets such as cryptocurrencies and tech stocks, and into traditional safe-haven assets like U.S. Treasuries and gold. The rise in U.S. Treasury yields not only reflects safe-haven demand but also compresses the valuation space for risk assets. This is a self-reinforcing cycle: the more people seek safety, the riskier risk assets become.
The behavior patterns of institutional investors are worth noting. Unlike the emotional trading of retail investors, institutional selling is often based on strict risk management rules. When a certain risk indicator triggers a red line, they will reduce their positions without hesitation, regardless of market sentiment. The current selling resembles institutions executing established risk control procedures.
In the short term, uncertainty will continue to dominate the market. It is difficult for large funds to dare to counter the trend and bottom-fish before the minutes are released. For ordinary investors, now is not the time for heroism. Appropriately reducing positions and increasing cash ratios while waiting for the fog to clear may be a wiser choice. Remember, in this marathon of investing, surviving is more important than running fast.
