Before the halving, funds became cautious and differentiation intensified
This BTC halving is different from the past. The situation faced by this halving is that the BTC output has been diluted to a "terrible" level; a historical high appeared before the first halving; the Fed's unprecedented macroeconomic environment of raising interest rates and shrinking the balance sheet; the approval of spot ETFs and other factors. Due to the strong support of ETFs, Bitcoin has a strong consensus and funds continue to flow in, so even if the correction is not large after a wave of surges, most of the altcoins and memes have fallen into a "technical bear market" and the capital sentiment is weak, including Ethereum.
The reason for the differentiation is also relatively simple. Before the Fed did not fully cut interest rates and release water, except for BTC with ETF support, other altcoins did not have so much liquidity support, and now "big projects" are launched every now and then to suck blood, and the market value is tens of billions when they are launched. The market funds are limited, and the correction is also quite severe after the sentiment subsides. As the size of ETFs increases, the net inflow of funds that ETFs can attract will also slow down, and the subsequent ETF fomo sentiment will weaken, turning into a long-term capital drive.
After the halving, it is estimated that the core driving force will depend on when the Fed will comprehensively cut interest rates and release a large amount of money. The trigger for the decline during this period was that a member of the Federal Reserve said that there might be no need to cut interest rates in 2024. The market is speculating expectations. Everyone expects that there will be 3-5 interest rate cuts in 2024. As a result, this expectation has been reduced, so it has become bearish. Therefore, the market expects that if the Federal Reserve cuts interest rates quickly and multiple times, it may enter a soft landing or no landing before the economic recession, but if there is no interest rate cut or "hard support", there is a high probability that an economic recession will occur.
However, the data level has not yet supported the situation of recession or fundamental problems, so it is more of an emotional impact, and the possibility of a sharp decline in the short term is not too great. In the coming days, the market is likely to continue to diverge. BTC may not fall much due to the support of ETFs, but other cottages will still have to endure the dilemma of insufficient market funds before the Fed's definite release of money. If it is not a short-term strategy, it would be a better time to wait patiently for the opportunity to buy at the bottom in the next few months or wait for panic selling.
