crypto1小智

What was the point of using indicators in last night's market?

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【This round of the cryptocurrency bull market may have ended】
Any bull market in capital markets requires continuous inflow of incremental funds to sustain it. However, the sources of incremental funds in the cryptocurrency sector have all dried up:
1. Altcoins have collapsed. This round of the cryptocurrency bull market did not generate new hot altcoin trends to successfully attract off-market incremental funds, and there hasn't even been a decent rotation of altcoins. The traditional source of incremental funds that attracted new money into the cryptocurrency market and eventually flowed into Bitcoin is gone.
2. The Bitcoin spot ETF in the U.S. stock market has shifted from net inflow to continuous net outflow. In the past month, at 10:30 PM Beijing time on each trading day, Bitcoin has almost promptly plunged, largely because as soon as the U.S. stock market opens, the Bitcoin spot ETF starts to unload, dragging down the entire cryptocurrency sector. After the U.S. stock market closes, it rebounds, but the next evening when the U.S. stock market opens, it starts unloading again, bringing down the market.
3. The stingy Trump is not willing to spend a dime. A significant factor in this round of the cryptocurrency bull market was Trump's claim during his campaign that he would include Bitcoin as part of the U.S. government's reserve assets. Market participants thought the U.S. government would spend money to buy Bitcoin for them to take over! But in reality, Trump just inflated the bubble; he only spoke sweetly and was not actually prepared to spend any extra money to buy Bitcoin to increase reserve quantities. So this last hope supporting the bull market has been shattered.
4. The U.S. increasing tariffs globally has lowered the Fed's expectations for interest rate cuts. This round of the cryptocurrency bull market began in December 2022 when U.S. inflation peaked and started to decline, leading the market to predict that the Fed would begin to cut rates continuously, benefiting all capital markets and thus ending the previous year-long bear market in cryptocurrencies. However, with Trump's recent return to office and the imposition of tariffs globally, the market predicts this will lead to rising domestic prices and renewed inflation in the U.S., forcing the Fed to interrupt its rate-cutting pace, with even the possibility of rate hikes in extreme scenarios. This has had a huge impact on both the U.S. stock market and the cryptocurrency sector, with the Nasdaq repeatedly breaking below the 120-day and 200-day moving averages, which has also led to a significant decline in the cryptocurrency sector.

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Why was Liangxi able to double his investment with a small amount of capital?

In 2021, Liangxi turned a principal of 1000 yuan into 10 million yuan in a short period through cryptocurrency contract trading. This case of 'small bets yielding big returns' is primarily based on the following key factors:

1. High leverage and rolling position strategy

Leverage trading: Cryptocurrency contract trading allows for high leverage (such as 10x, 20x, or even higher). Liangxi amplified the effect of his principal through leverage. For example, with a principal of 1000 yuan using 20x leverage, the actual trading scale can reach 20,000 yuan, and the profits or losses from price fluctuations will also be magnified by the leverage.

Rolling position operation: He frequently adjusted his positions in the short term, continuously increasing his investment using profits (i.e., 'rolling positions'), especially profiting repeatedly through shorting or going long during periods of extreme market volatility. This strategy can achieve exponential growth in a one-sided market.

2. Market volatility and timing

Emotion-driven market: The cryptocurrency market is significantly influenced by news, hype, and other factors. Liangxi may have utilized market panic or FOMO (fear of missing out) sentiment to operate in the opposite direction during extreme market conditions.

3. High-risk trading style

Aggressive strategy: Liangxi's trading style is characterized by high frequency and high positions, even borrowing multiple times after losses to attempt a 'comeback.' Although this gambling mentality may succeed in the short term, it carries immense long-term risks.
Lack of risk control: From subsequent liquidation experiences, it is evident that he did not set strict stop-loss mechanisms, leading to unsustainable profits, ultimately resulting in rapid losses due to market reversals or operational errors.

4. Social media and traffic effects

Personal hype: Liangxi live-streamed his trading process on platforms like Weibo, attracting a large audience. The influence brought by traffic may indirectly affect market sentiment, even leading other investors to follow his trades, further amplifying his trading effects.

5. Short-term unreplicable luck factor

Liangxi's success has a strong element of chance. For example, he claimed during a live stream to 'turn a thousand times in one day,' but the actual trading details were not disclosed, which may involve survivor bias during several extreme market conditions. Similar cases are rare in the cryptocurrency circle, as most high-leverage traders eventually exit the market due to liquidation.
#BTC #Liangxi