1. The People's Bank of China has injected 600 billion 'liquidity'! History shows: when liquidity is released, the crypto market often has surprises.
As soon as the market opened on Monday, the People's Bank of China released a big move - 600 billion MLF operation was implemented, equivalent to injecting a wave of 'liquidity' into the market. Don't think this is just an 'entity economy matter', experienced players in the crypto circle understand: when liquidity is abundant, excess funds always flow into high-risk areas, and crypto assets like BTC and SOL are seen as 'delicacies' by investors.
Reviewing historical data reveals patterns:
In 2020, the People's Bank of China lowered the reserve requirement ratio, releasing 1.75 trillion, and during that month, BTC rose from $7,000 to $10,000, an increase of 43%;
In 2022, MLF increased by 500 billion, and SOL rose from $90 to $120, an increase of 33%;
In 2023, the 600 billion MLF operation was implemented, and ETH rose from $1,800 to $2,100, an increase of 17%.
This time, although the 600 billion liquidity injection directly flows into the real economy, it cannot withstand 'capital seeking profit' - if the stock market doesn't find good targets, this money will likely flow into the crypto market through 'off-market channels'. Especially now that BTC is stuck at the critical level of $113,000 and SOL at $203, once funds come in, they are likely to break through resistance levels and start a rebound.
But also note: liquidity injections do not have an 'immediate' effect - during the 2020 case, it took 5 days to start rising after the injection; in 2022, it took 3 days. Don't rush to chase highs upon seeing news today; it's best to wait until capital flow is clear (for example, if BTC's trading volume suddenly expands to $20 billion/hour) before taking action, to avoid falling into the trap of 'news landing and then crashing'.
2. U.S. PCE data is a 'life and death situation'! Exceeding expectations = price crash, cooling = celebration, see you next Friday for clarity.
The biggest uncertainty this week is not the liquidity injection, but next Friday (September 1) when the U.S. will announce the July core PCE data - this is the inflation indicator that the Federal Reserve values most. Last year, when PCE exceeded expectations, BTC dropped from $69,000 to $17,000; this June, when PCE cooled, BTC rose from $100,000 to $115,000. The market currently expects PCE to rise to 2.9%, and if it exceeds expectations, the crypto market may directly 'plummet'.
First, understand the logic of the PCE data:
If PCE exceeds expectations (for example, rising above 3.0%): The Federal Reserve will feel that 'inflation has not been suppressed', the probability of a rate cut in September will drop from 60% to 20%, and they may even restart interest rate hikes. At that point, funds will flee from the crypto market and stock market to 'safe-haven assets' like the U.S. dollar and government bonds, potentially causing BTC to drop below $110,000 and SOL to break below $200;
If PCE is below expectations (for example, dropping below 2.8%): The market will feel that 'rate cuts are secured', and funds will flood into risk assets, potentially pushing BTC to $118,000 and SOL breaking through the $214 resistance.
If expectations are met (2.9%): Long and short positions will be in a stalemate, with prices oscillating in a narrow range, waiting for the next signal.
There was a bloody lesson in 2022: At that time, PCE exceeded expectations at 4.7%, and the Federal Reserve announced a rate hike of 75 basis points. BTC dropped from $30,000 to $17,000 in half a month, and SOL dropped from $120 to $30, trapping many people. The current situation is somewhat similar - inflation has not reached the 2% target, there are significant divisions within the Federal Reserve, and the PCE data is the 'line of life and death'. Before next Friday, do not go all-in, do not chase highs, and keep cash on hand.
3. Germany IFO + U.S. new home sales data: Monday will give the crypto market a 'big hit', do not underestimate.
Don't wait for Friday's PCE; on Monday (August 26) there are two 'appetizer' data points that will explode - the Germany August IFO Business Climate Index and the U.S. July New Home Sales data. These two data points may seem unrelated to the crypto market, but they can influence global capital flow and subsequently impact the crypto market.
First, look at the Germany IFO data: This is the 'barometer' of the European economy. If the data rises (for example, from 85.7 to 86.5), it indicates improvement in the European economy, and funds will flow into the eurozone stock market, potentially draining the crypto market; if the data falls (for example, dropping below 85), panic in the European economy may rise, and funds may flow into BTC and other 'global safe-haven assets', which is favorable for crypto prices.
Looking at the U.S. new home sales data: If the data exceeds expectations (for example, rising from 690,000 to 720,000), it indicates a good U.S. real estate market, suggesting economic vitality, and the Federal Reserve may be more inclined towards a 'hawkish' stance, which is negative for the crypto market; if the data falls short of expectations (for example, dropping below 650,000), it signals clear economic weakness, raising expectations for interest rate cuts, which is positive for the crypto market.
These two data points will be released on Monday morning and are likely to give the crypto market a 'big hit' - for example, in November 2023, the Germany IFO data plummeted, and BTC rose from $37,000 to $39,000 that day; U.S. new home sales data falling short of expectations led SOL to rise from $100 to $108. Don't act rashly at the market open on Monday; wait for the data to come out and see the direction, which is much more reliable than guessing.
4. UK market closure + Pinduoduo / Haidilao financial reports: one causing a 'spike', one determining 'capital preference'.
This week there are also two easily overlooked 'dark lines', but their impact is not small - the UK market closure on Monday may create a 'spike market', and Pinduoduo and Haidilao's financial reports can change capital's attitude towards risk assets.
First, let's discuss the impact of the UK market closure: The London Stock Exchange is closed on Monday, and trading volume in European markets will drop by more than 30%. Although the crypto market trades 24 hours, large funds (such as European institutions) often follow the rhythm of traditional markets. Once European trading volume decreases, the 'liquidity of the crypto market will weaken' - for example, BTC usually trades $50 million in one minute; during the closure, it may drop to only $20 million. At this time, if there is a large buy or sell order of $100 million, it can cause the price to rise or fall by 5%, commonly referred to as a 'spike'.
During the UK market closure in 2023, BTC dropped from $42,000 to $40,500 due to a spike and quickly rebounded to $42,000. Many retail investors who set stop losses at $41,000 were shaken out, and then BTC rose to $45,000. Short-term players this week should pay attention: avoid ultra-short trading on Monday, set stop losses wider (for example, BTC at $110,000, SOL at $198) to avoid being harvested by spikes.
Looking again at Pinduoduo and Haidilao's financial reports: these two are the 'leaders' in China's consumption sector, and the performance of their financial reports can reflect the health of the Chinese consumer market. If Pinduoduo's revenue and profit exceed expectations (for example, growing more than 60% year-on-year), it indicates a recovery in Chinese consumption, and the market will think that 'risk assets have potential', leading funds to flow from dollar assets to the Chinese stock market and crypto market; if the financial reports fall short of expectations (for example, growth below 40%), the market will panic about 'weak consumption', and funds may retreat to safe-haven assets, which is negative for the crypto market.
Especially Pinduoduo, whose Q3 financial report last year exceeded expectations, causing ETH to rise from $1,500 to $1,650, and SOL from $80 to $88; this year, the Q2 financial report fell short of expectations, causing BTC to drop from $110,000 to $105,000. Before the financial report release this week, do not over-invest, wait for the results to come out before adjusting positions.
5. The new tariff regulations in India take effect: the global trade 'butterfly effect' indirectly affects capital in the crypto market.
This week there is also a 'hidden variable' - India's new tariff regulations officially take effect, imposing tariffs on electronic devices and chemical products. Don't think India is far from the crypto market; this will trigger a 'butterfly effect': India's tax increase → global trade costs rise → some companies' profits decline → stock market volatility → changes in capital flow → impacting the crypto market.
For example, in 2022, India's 30% tax on crypto assets caused a 50% drop in crypto trading volume in India, and at that time, BTC fell from $48,000 to $42,000; in 2023, India relaxed tariffs on some goods, leading to a rebound in global trade, and BTC rose from $25,000 to $38,000. If this tariff regulation affects the global supply chain, it may lead to a stock market drop, causing funds to flow to BTC for safe-haven; if the impact is minor, the impact on the crypto market will be small.
Although this factor's impact is smaller than PCE and liquidity injections, it should also be monitored - especially for players involved in cross-border crypto payments and NFT transactions, India is an important market, and changes in tariffs may affect the ecosystem of related projects, thereby impacting token prices (e.g., Matic, Ada, which have a presence in India).
6. How should we lay out this week? Operate according to the 'event timeline', don't rush.
This week's market is not about 'reading K lines', but about 'watching events'. Only by planning strategies according to the timeline can one profit without losses:
1. Monday (August 26): Wait for data + prevent spikes, do not act.
9:00 Germany IFO data release: If the data drops → lightly add BTC (10% position); if the data rises → hold with no positions;
22:00 U.S. new home sales data release: If the data falls short of expectations → increase positions in SOL (5% position); if it exceeds expectations → reduce positions by 5%;
All-day anti-spike: BTC stop loss set at $110,000, SOL stop loss set at $198, avoid ultra-short trading, keep position below 50%.
2. Tuesday - Thursday: Wait for financial reports + observe liquidity injection effects, look for support/resistance levels.
Pinduoduo and Haidilao's financial reports will be released (specific time according to announcements): If the results exceed expectations → increase positions in mainstream coins (add 5% to BTC/ETH/SOL); if results fall short of expectations → reduce positions by 10%;
Observe the effects of liquidity injection: Watch if the Chinese stock market rises; if A shares rise more than 2%, it may boost the crypto market, with BTC targeting resistance at $115,000 and SOL targeting resistance at $214; if A shares fall, the crypto market may pull back, with BTC looking for support at $112,000 and SOL at $201.
Maintain a position of 50%-60%, do not go all-in, keep cash for the PCE on Friday.
3. Friday (September 1): PCE data will determine life or death, act based on the results.
20:30 U.S. PCE data release:
Exceeding expectations (≥3.0%): Liquidate 50%, BTC target at $110,000, SOL target at $200, continue to reduce if it falls below;
Below expectations (≤2.8%): Increase positions by 30%, BTC target at $118,000, SOL target at $214, hold if it breaks through;
Meeting expectations (2.9%): Keep positions unchanged, wait for the next signal.
