I spent two days with my daughter during the National Day holiday, so I didn’t pay attention to the crypto market or the stock market. However, the discussion among the friends in the group was still very lively. The topics of the two days were mainly focused on the A-share market, Hong Kong stocks, and the global situation... It seems that as long as you check the group messages every day, you can get a glimpse of global events and economic trends.
In a previous article of Hualihuawai, we shared data on the quarterly return rate of Bitcoin. From the historical data, the average return rate in the fourth quarter exceeded 80%. Although history does not necessarily represent the future, it also makes many people look forward to the market after entering October. As shown in the figure below.
While everyone was still immersed in the market rebound, with the missiles launched by Iran to Israel falling, Bitcoin fell by about 4% in the first two days of October, in sharp contrast to the average increase of 20% in October in the past 10 years. In contrast, gold rose by more than 1%.
The current geopolitical situation in the Middle East does have a great impact on the global economy. Many people attribute the rise in gold prices to the intensification of the Middle East crisis, which I agree with. However, many people also attribute the decline of Bitcoin to Iran's missiles. I think this is a bit of a forced reasoning for the decline of Bitcoin. I can only say that there may be a little relationship, but it is only a little bit.
Bitcoin is under short-term pressure in the range of $64,500-68,500. The current short-term support level is around $61,200, and the strong support level below is around $54,300. It rebounded to $65,000 a few days ago, and now it continues to fluctuate and fall a little, which is also a normal fluctuation range in our opinion. Moreover, since the end of last month (September), many leveraged positions have entered the range of $64,000-65,000. The market needs to explode these leverages, which is healthier.
Of course, the geopolitical situation will indeed affect the crypto market. After all, the crypto market is also a financial market from a certain perspective. As for whether the crypto market will be affected by the Middle East crisis and lead to further decline, this may still depend on the Americans. If the Americans forcefully intervene, the crypto market may also experience a sharp decline, and it is not ruled out that it will directly fall to the support level of $54,300.
And if a larger black swan event that we cannot predict occurs in the next few months, it is not ruled out that Bitcoin will directly plunge to around 45,000. But don’t be afraid, if such a large-scale black swan event really occurs, you can boldly buy Bitcoin at that time.
Our current recommendations remain the same:
- Don’t panic and sell your Bitcoins just because of short-term fluctuations
- If you are still optimistic about the crypto market in the fourth quarter of this year or next year, then plan your positions reasonably and continue to buy Bitcoin on dips (but don’t be too anxious, you need to be patient in this process and perform DCA operations according to different support levels)
- If you want to research and buy some Altcoin, you might as well pay more attention to the tokens that performed relatively strongly last week (such as the AI or MemeCoin narratives in Binance that rebounded strongly last week)
- Calm yourself down and stay focused on the 1–3 niches you’re focused on. Don’t let the buzz of headlines and get-rich-quick stories sway you.
As for the overall performance of the market in the fourth quarter and 2025, we will continue to remain optimistic, mainly based on several considerations:
1. The Fed cuts interest rates
Last month (September 18), the Federal Reserve officially implemented a 50 basis point interest rate cut. From a medium- to long-term perspective, the Federal Reserve’s interest rate cut is beneficial to Bitcoin and other risky assets.
If the U.S. economy can achieve a "soft landing" due to this rate cut, that is, avoid a severe recession while controlling inflation to a certain extent, then Bitcoin will definitely benefit from it. Because the main purpose of the rate cut is to stimulate economic activities, this may drive more investors to turn to riskier asset types such as Bitcoin.
Of course, this also requires a process. Starting from the time the Federal Reserve announces a rate cut, we may need to wait patiently for at least a few more months before we can see some specific market reactions.
According to current expectations, if the Federal Reserve can successfully move toward a 2% interest rate, then theoretically this goal will be achieved in 2025. And from historical data, the Bitcoin bull market is likely to continue to appear during periods of relatively low interest rates, as shown in the figure below.
2. US election
There is still more than a month to go before the US presidential election. Needless to say, Trump used Bitcoin to buy hamburgers in public last month. Now even Harris has stated that if she is elected president, she will encourage the development of the cryptocurrency industry.
In terms of the market's short-term performance, the US election usually triggers fluctuations in financial markets (including the crypto market), and judging from the statements of the two candidates, it seems to be beneficial to the crypto market.
Of course, this political game is estimated to only affect the short-term trend of Bitcoin. As for the long-term trend of Bitcoin, this year's US election will not have a long-term impact on it. Because among the more influencing factors of Bitcoin price, there may be more macroeconomic aspects, and as more and more elite investors regard Bitcoin as a tool for storing value, it is also increasingly regarded as a kind of digital gold. Like gold, Bitcoin will definitely fluctuate in the short term, but if it is put into a longer period of time, Bitcoin actually has a relatively large development potential.
In the future, Bitcoin will definitely become the most effective tool to hedge against the depreciation of legal currency and economic instability. Regardless of who is elected president, in the short term, some new regulatory policies may bring volatility to the cryptocurrency market (good or bad), but in the long run, they will not be able to stop Bitcoin.
3. Global liquidity
Previously, we mainly focused on the liquidity of the US dollar, but now we may also need to take China’s economic stimulus policies into consideration.
Recently, the mainland has continued to announce multiple economic stimulus plans, which not only directly boosted the A-share market, but also, as the A-share market was closed for the National Day holiday, the Hong Kong stock market took over the excitement. Just today (October 2), the Hong Kong stock market opened higher and continued to rise. As of noon closing, the Hang Seng Index rose 6%, breaking through 22,000 points; the Hang Seng Technology Index rose nearly 9%, breaking through 5,100 points; and some individual stocks even soared 445%, as shown in the figure below.
Although the trillions of funds in mainland China are mainly directed into the stock market, the first wave of stock speculation is expected to continue until the end of this year, coupled with some policy issues, we will not see funds flowing into the crypto market in the short term. However, funds are always profit-seeking, and when the time comes, even if there are some resistances, it is not ruled out that some funds may flow directly or indirectly into the crypto market next year (2025).
Overall, the global M2 money supply is rising and breaking through. When the money printing machine starts to work again, no one can escape the fate of asset dilution. However, the continuous breakthrough of M2 is a potential positive for Bitcoin. As shown in the figure below.
In addition, let's not forget the $16 billion in debt that FTX will begin to repay, which is scheduled to be approved as early as October 7. If the plan is approved, claims under $50,000 could be paid as early as the end of 2024; for larger claims, it is expected that it will not be paid until the first or second quarter of 2025. As shown in the figure below. This part of the funds is likely to flow back into the crypto market, and may have some new positive emotional impact on the crypto market.
4. Summary
In short, the current crypto market still seems to be in an uncertain stage and is facing some problems, such as the shipping pressure of ancient Bitcoin whale, the influence of geopolitical and economic indicators, the large-scale unlocking of various major Altcoin(more than US$4 billion worth of tokens were unlocked in October alone), etc. Therefore, we speculate that the market may still be dominated by volatile conditions, and there are no strong catalysts for the rise in the short term. It is hard to say whether Bitcoin can set a new high in the fourth quarter of this year. Let's wait until it can effectively break through US$68,500.
However, from a medium- to long-term perspective, the market seems to be accumulating some energy, and some important catalysts have not yet emerged and exerted their real effects. The fourth quarter of this year will be an important transition (change) period, and perhaps we need to continue to wait patiently until 2025 to see some new directions and possibilities. As we mentioned in an article last month (September 21): When we look back after the end of 2025, we may find that Bitcoin is now heading for a record high.
We will share the content of this issue here. You can view more articles on the homepage of Hualihuawai. The above content is only a personal point of view and analysis, which is only used for learning records and communication, and does not constitute any investment advice.
