If we count from September last year (2023), BTC has risen 3 times in this bull market. But with the halving in April this year, BTC has entered a new consolidation phase. According to the laws of historical cycles, the consolidation before and after the halving is also a normal phase.
As of now, from the perspective of market trends, BTC has been consolidating for almost 15 weeks and has fallen by about 15% from its ATH, as shown in the figure below.
From a personal perspective, everyone's mood seems to be generally not very good in recent months. Many people feel bored and frustrated by the recent market conditions. Some people are trying to find various reasons for the decline every day to convince themselves, and some are even shouting that a bear market is coming.
So, will BTC continue to fall by 20% or even 30%? No one can accurately predict this, and any prediction is just a guess.
In the bull market of 2017, we have experienced corrections of 20%, 30%, and even 40%, and each small process during this period was actually painful. As shown in the figure below.
During the bull market in 2021, when BTC reached its ATH at the time, we also experienced a correction of more than 30%, but our mentality was basically much calmer.
In fact, in my opinion, the current market situation is also a normal adjustment. Of course, with the decline of BTC, the decline of many Altcoin will be greater.
But another point is that although many Altcoin have fallen sharply in recent months, and some have even fallen by more than 50%, the overall market value of Altcoin has not fallen too much. Let's take a quick look at the data from TOTAL2. Since September last year, the total market value of Altcoin has increased by 155%. In the adjustment phase in recent months, the largest drop in the total market value of Altcoin is only about 20%. As shown in the figure below.
On the surface, you can see that many Altcoin have indeed fallen badly in recent months, but overall, this may also mean that the value of some individual coins has returned, because the previous valuation was indeed too high. The biggest problem with Altcoin in this round of bull market is that there are too many new tokens with high FDV and low circulation that are constantly listed. We have already sorted out this issue in our previous article on the topic of Altcoin, so I will not go into details here.
Or, let’s start counting from January this year. BTC broke through the ATH from less than $40,000 to nearly $74,000 in one go, an increase of nearly 185% in less than two months. Therefore, the subsequent consolidation and decline were predictable, and this stage is also a necessary part of the market.
If you can only accept the rise, but not the fall, then it only means that you are not ready for "trading". Besides, it is said that the capital tycoons and the rich on Wall Street will spend their summer vacation in their luxury vacation homes in June and July every year, so why not wait patiently for a month or so, when the rich come back from vacation to eat meat, we will have soup.
Anyway, as a long-term BTC bull, I will definitely choose to ignore such fluctuations and remain optimistic when encountering similar market conditions. Of course, this optimism is not groundless, and we have actually summarized a lot of data and indicators for you in the previous articles on the market and BTC.
A few days ago, I saw @Rekt Fencer share some interesting data on the Internet. Next, let’s combine the data he shared and continue to look at references from different angles:
1. Federal Reserve Assets and Liabilities
Since entering this cycle, the economic data from the United States seems to have become crucial to the trend of the crypto market. At present, many people are paying attention to the Fed's CPI data. In addition to the expectation of interest rate cuts, we might as well take a look at the Fed's assets directly. As shown in the figure below.
From the above chart we can see that after nearly two years of decline, the Federal Reserve's assets seem to have begun to bottom out.
How to understand this data?
We all understand that when the Fed injects liquidity, it buys assets and adds them to its balance sheet. And vice versa. Usually, when the Fed starts buying assets, the funds will mainly flow to TradFi (traditional finance), and many TradFi fields are currently closely related to the crypto market, so some liquidity will definitely flow into the crypto market.
You may also want to think about it yourself. Once the above situation happens, which areas (or tracks) will benefit first in the crypto market? I will not give my answer here, but leave a question for you to think about.
2. Global capital mobility
Since July last year (2023), the US dollar index has generally shown a trend of continued upward movement, and the interest rate of around 5% is still very attractive, which will definitely put greater pressure on other assets around the world. In this environment, it is unrealistic to expect the price of Bitcoin to soar.
In addition to focusing on the data from the Federal Reserve, we cannot ignore the capital power of other countries. By monitoring the Global Net Liquidity Index (which includes the assets of major central banks around the world and the reserves of the Federal Reserve), we can also find that the current global capital liquidity seems to be entering a new round of integration, and we may be able to see new trend changes in the near future. As shown in the figure below.
Some research institutions have stated that as more and more policymakers turn to loose monetary policy in 2024, central banks are expected to provide greater liquidity support. The last time global liquidity hit a low point was in October 2022. From a cyclical perspective, global liquidity usually fluctuates within a five- to six-year time span. It is expected that the latest round of liquidity increases may reach a peak again in 2025. By then, all the funds must go somewhere.
At present, major countries such as Canada and Switzerland have lowered their interest rates, and many analysts also expect the Federal Reserve to start cutting interest rates before the end of this year. It is no exaggeration to say that the expectation of interest rate cuts has become more and more obvious and closer. A rate cut means that a new round of money printing will start working, more funds will be injected into TradFi, and some funds will flow into higher-risk assets (such as crypto assets). Let us wait and see.
3. Stablecoin supply
The total supply of stablecoins on the chain is currently $164.9 billion, a figure that is not even close to the liquidity peak of the previous bull market cycle, which also shows that new funds seem to continue to enter the crypto market. As shown in the figure below.
As for how much liquidity can be added to the cyclical crypto market, it is difficult to say at present, which may also depend on the interest rate cut expectations of the Federal Reserve mentioned above. But we can understand the basic idea, that is, more liquidity entering means more opportunities, which also means more risk opportunities.
4. Quarterly Scale of Venture Capital
In the last bull market cycle, along with the market's rise, the quarterly financing scale in the crypto field also reached a maximum of 13 billion US dollars. Although we are also experiencing a bull market at present, from the perspective of the overall financing scale, even though BTC has broken through the ATH this year, venture capital activities are mostly sluggish, and the hype in the financing market does not seem to have reached the theoretical scale. As shown in the figure below.
This may also be an important source of new liquidity in the crypto field. Assuming that there will be a large amount of new financing activities in the later stages of this bull market, it will inevitably inject more liquidity into the market.
5. US election and cryptocurrency
MemeCoin, which is related to the Facebook concept, has become popular again. In addition, the new presidential candidate, who has been the president of the United States, also stated this month (June 12) that he hopes that the remaining bitcoins will be mined in the United States. He also met with several representatives of bitcoin mining companies, said that he loves cryptocurrency, and said that he would speak for miners in the White House.
The new US presidential election will be held in November this year, which is also considered by many to be a catalyst for the encryption field. Some analysts even say that if Facebook is elected, Bitcoin will definitely go directly to $150,000 (of course, this is just someone else's opinion).
But it is undeniable that cryptocurrency now seems to have become a key part of American politics, especially in the Facebook-Biden campaign. Once upon a time, we even had to pay attention to other people's elections for president. Sometimes, you really need to pay attention to a lot of aspects when you are in this field.
The above five angles are all macro-oriented and may not be of much use to those who like to do short-term swing trading, although we have always advised ordinary traders to try not to do any swing trading during the bull market.
At this stage, your options are:
- If you cannot accept such market fluctuations, then it is recommended that you lower your expected goals and do not hesitate when it is time to take profits. It is better to make less money than to lose money in the end. In other words, only make money within your cognition.
- If you are stuck with BTC/Ethereum, just be patient. If you really don't have the patience, just sell it at a loss, and then go back to your life. Once you do this, don't do anything else, don't chase the rise and fall, and don't take it for granted to do the so-called high-sell and low-buy.
- If you are still holding short positions and waiting, the current correction may be one of the few remaining opportunities for you to get on board in this bull market. You can build positions in batches according to your own funds. As for how to build positions reasonably, we have also made some new arrangements in the previous article, so I will not repeat them here.
- If you have a lot of counterfeit stocks and are stuck with them, then you need to ask yourself why you bought those counterfeit stocks in the first place, was it a long-term or short-term plan when you bought them, what was the basis for the long-term plan, and whether you have set profit/stop loss in the short-term plan (or whether you are mentally prepared for the possibility of making money or losing money).
- If you still have some money left for altcoin positions, then you can actually buy in batches those projects that you were very optimistic about before but never had the chance to buy (miss the pump). Or if you are good at using some K-line technical indicators, you can also wait until the market develops a new trend before you open a position on the right side.
In the previous series of articles on the topic of Altcoin, we have mentioned more than once that I still believe that there is a chance for altcoins to enter the next cycle, but due to the particularity of this round of bull market, not all Altcoin have the opportunity to rise. And we have often mentioned in previous articles that in this field, don’t always think about being able to seize all opportunities. In fact, it is enough to seize 2-3 opportunities in each cycle. Everyone’s time and energy are limited. You don’t have to study and understand hundreds of ecosystems/tracks at the same time. Just focus on the 1-3 ecosystems/tracks that you are most optimistic about.
As for the specific operation, it doesn’t matter if you don’t want to buy BTC. It’s a personal choice, and no one will force you to make any requirements in this regard. But even if you buy a copycat, at least you should find a few reasons to buy it. For example, when you decide to buy a specific currency, if you can quickly list 3 reasons to buy it within ten minutes (each reason can be summarized in one sentence), then you don’t have to hesitate too much, just build positions in batches, and then try to follow the overall trend of the market as much as possible, and don’t do short-term swings. Because if you can do this, it basically means that you have really spent time and energy to do some investigation, research and thinking.
Otherwise, you may fall into a strange phenomenon: you often find that except for the Altcoin you hold, all other coins you see have increased. Yes, it is so magical!
Or let's take a step back and say that even if you enter the market late and miss the opportunity of this round of bull market, what will happen? The market is cyclical. Most people generally cannot make a lot of money when they go through the first cycle. In fact, the first cycle is the most suitable for observation and learning, and then through the second cycle, the third cycle... to make a complete layout. After all, the chosen ones are just exceptions. As ordinary people, our life opportunities are just two words: cycle.
If you want to gamble, go ahead. But if you also want to change your life, then please think seriously about the two words mentioned above.
Sometimes when I look back, I really have some small feelings. Time flies. From 2017 when I started holding Bitcoin to now, 7 years have passed unknowingly. During this period, I also experienced some helplessness, confusion and anxiety in the first two years (actually, like most newcomers who have just entered this field). In the middle years, I enjoyed some digital feedback brought by this field (there is also a certain amount of luck). In the past two years, I have been doing what I like and want to do. In this process, I slowly changed from a newbie who knew nothing to a long-termist BTC and a firm coin hoarder. But I always feel that I am still a primary school student in this field. There are still many things I don’t understand, and there seems to be a lot of things that need to be learned and improved.
I hope everyone can better understand the cycle, enjoy the cycle, and then use the laws of the cycle to change themselves~
At the end of the article, let’s take a look at some hot information in recent days:
On June 23 , according to Dune data, Ethereum Gas fell to its lowest level since 2020, and the Gas price has caused Ethereum's consumption rate to drop to its lowest level in 12 months. As shown in the figure below.
According to data from Ultrasound Money, Ethereum is currently experiencing slight inflation due to its low consumption rate, with its seven-day average supply growth rate being 0.57% per year, as shown in the figure below.
Next, if no new funds enter ETH, it is possible that the price of ETH will continue to fall. At present, the market may mainly rely on the official approval of the Ethereum spot ETF and the expectation of interest rate cuts from the United States.
On June 24 , according to Tree News, the Mt Gox trustee said it would initiate BTC and BCH repayments. As shown in the figure below.
On June 25 , according to Token Unlocks data, the mainstream crypto projects on the entire network will unlock a total of $222 million worth of tokens in the next 7 days. As shown in the figure below.
One of the main reasons for the recent sharp drop in the price of Altcoin may be that the market has difficulty digesting the huge token unlocking of a series of projects, and early investors and venture capital institutions also seem to be under pressure to cash out, which has led to an overall decline in the market and dragged down the price of Bitcoin.
There are also reports that, mainly due to the tightening of mining profit margins caused by the halving, some Bitcoin miners have begun selling their Bitcoin stocks. Since entering June, they have sold more than 30,000 BTC (about US$2 billion).
On June 28 , the US will release PCE data, which may have a further impact on the Fed's expectations of rate cuts, and will also have some direct impact on the short-term trend of the crypto market, as shown in the figure below.
This is the end of our sharing of this issue. This is also the 475th article updated by Hualihuawai. For the data references and image sources involved in the main text, please refer to the corresponding date articles of Hualihuawai Notion version.
Disclaimer: The above content is only a personal point of view and analysis, and is only used for learning records and communication, and does not constitute any investment advice. The encryption field is a high-risk market. In addition to various forms of fraud and pig-killing schemes, many projects also have the risk of returning to zero at any time. Please look at it rationally, improve risk awareness, and do not touch it if you don’t understand it.
