Dehydration view: Low-level fluctuations, beware of large market fluctuations

The previous dehydration point of view pointed out that the correction has not broken, and we continue to be bullish. However, after the release of non-farm data last Friday, the market rose first and then fell. Although Wall Street has been arguing over why it fell and how much the Fed will cut interest rates in September, the market has fallen after all. Whether the reasons for the decline are rational or emotional, they should last for a while. Therefore, we believe that the market will fluctuate at the bottom in the short term.

Since the period before and after the interest rate cut is highly sensitive, we cannot completely rule out a major reversal in the market due to some favorable factors. Please pay attention to the CPI data next week. Please control your leverage before the data is released.

The number of non-farm payrolls in the United States increased by 142,000 in August, lower than the expected 165,000. The unemployment rate fell from 4.3% in July to 4.2%, in line with expectations, and the unemployment rate fell for the first time since March this year. This does not seem to be a bad data, but it has brought about a market decline, and the decline is quite considerable. The S&P 500 fell 4.25% last week, the largest weekly drop since March 2023. The Dow fell 2.93%. The Nasdaq closed down 2.55%, a cumulative drop of 5.77%. The VIX index of fear rose 43.99%.

There are two relatively mainstream views on the reasons for the decline. The first view is that although the non-farm data is acceptable, the Fed officials' statements did not imply a 50 basis point rate cut. This is inconsistent with the market's previous optimistic expectations.

Another view is that the market is worried about a severe economic recession in the United States, so it tends to sell first because of the positive news of interest rate cuts, and then wait for the opportunity to buy the dips at the bottom when the market falls after signs of economic recession appear.

The report released by Minsheng Securities believes that the closer the US stocks and US bonds are to a rate cut, the more sensitive they are to non-agricultural data. Taking the S&P 500 as an example, in the past eight rounds of rate cuts, the average amplitude of the last non-agricultural data day before the first rate cut was 1.8%, the highest in the 12 months before and after the first rate cut. Secondly, after the first rate cut, the market's high sensitivity to non-agricultural data will continue for 2-3 months.

In fact, market sentiment fluctuates greatly before and after interest rate cuts, and overreaction is the norm. Therefore, everyone should pay attention to adjusting their leverage levels in the future, especially before and after the release of important data.

According to coinglass data, with the recent sharp fluctuations in the macro market, Bitcoin ETF funds have seen a large net outflow, and short-term short positions are relatively strong.

According to glassnode data, after a sharp increase in Bitcoin chain transaction fees, they have now fallen again, which shows that Bitcoin chain activities are still relatively weak and market activity is relatively low.

According to Deflama data, the net capital inflow of the Bitcoin ecosystem in the past month was -24.64%, and the net capital inflow in the past week was -5.69%. Today, there was a certain net inflow of 0.15%. The overall capital is still in a state of outflow, and the market bears are relatively strong.

Overall, there are signs of institutional funds flowing out of Bitcoin ETFs. In the short term, the market short position is relatively strong. In addition, the activity on the Bitcoin chain has remained at a low level, and the market performance is weak. In addition, the funds on the chain continue to flow out, and the BTC market is expected to remain weak in the future, with heavy selling pressure from above.

Although BTC continued to be weak after the non-agricultural data, and the price fell below an important support area (54,000), further decline seems inevitable. However, the judgment on the bulls in the previous few weeks was based on the large structure of the left bull advantage. Therefore, unless the price falls below 49,500, I will continue to hold a bullish judgment.

However, there have been some short opportunities in the local market. If the price rebounds above 55,600, the price will be under pressure and will most likely move downward to find a bottom again.