The recent market downturn reminds me that history always repeats itself in cycles. Let us now look at the source of this market downturn from a historical perspective and how long it is expected to last.
Why did the surge occur after halving?
First of all, the halving of Bitcoin has halved the mining reward, reduced the supply of new Bitcoins, and increased the mining cost. In order to maintain the operating costs of miners, under the mediation of supply and demand, the price of Bitcoin is bound to rise. Otherwise, miners will earn too little and will not maintain the operation of the Bitcoin blockchain.
Why did the long period of price increase before the halving occur?
This is easy to understand. The expectation of Bitcoin halving has driven institutional and retail investors to buy BTC.
Why there is a big drop in the month closest to the halving:
When the halving is approaching, market sentiment has reached its highest point. When it is expected to arrive, it is a sign of bad news. The core purpose is to wash out the retail investors who got on board in anticipation of the halving. Because all secondary markets are zero-sum games, it is impossible for everyone to make money. Only by washing out the retail investors through a big drop can the big investors have the opportunity to get on board again at a low point. And the expectation is the best bad news point. This historical law also appeared when the US BTC spot ETF was passed on January 10 this year.
After deriving this historical law, we can easily find that there will be a high probability of a big drop before and after the halving to wash out as many retail investors as possible. I think today is not the end, it will continue for several days until all retail investors are washed out enough, and it may even fall to 58,000-55,000.
How long will this decline last?
According to the pre-halving decline peaks of the previous two cycles:
The halving in 2016 dropped by 15%: 760 in June 2016 - 650 in July 2016
The price will drop by 50% after halving in 2020: 9900 in February 2020 - 5000 in March 2020
24 years down ?%: 24 years March 73787 - ?
If we calculate based on the 15% halving in 2016, the bottom is 62,000
If we calculate based on 50% over 20 years, the bottom is 37,000.
If we look at it based on an intermediate value of 20% to 30%, the bottom of this big drop will be in the range of 52,000 to 58,000 yuan.
According to this standard, it has fallen to 60711 and rebounded to 61200+ in the early morning. It is expected that it will take at least several days to fall to the expected low point. Conservative estimates show that it will continue to fall for about a week.
Always keep enough bullets
Maintain the balance of existing funds and positions, and don't get carried away easily. Only rational investors can truly make money in a bull market.
Clear your positions in time when the market has a clear bearish trend, so that when the market falls, you will have enough bullets to continue to buy at the desired bottom.
Think about why the copycat stocks have fallen so sharply in this cycle?
I think there are several reasons. In addition to the war risk aversion factor, copycat assets are essentially high-risk assets. The monthly consolidation may not allow too many new users to enter the crypto.
Secondly, the price trends of most new copycat properties are currently determined by MM.
Some of the hot spots and new plates that everyone plays are basically
Jump/wintermute/GSR/DWF/Binance are used to maintain the price.
It is said that the dual-track combination of MM is popular now. Those who actively pull the price are usually young MMs who are familiar with the project party, and big MMs are used for branding + price maintenance.
Can we observe some small signals to try to guess when the main uptrend of the altcoin will come?
1. Today I looked at the large orders of W and pyth, which were basically 15-20% below the market price. (Note that both W and pyth use jump to do mm)
2. After the last wave of BTC's sharp drop and rebound to around 66k, some altcoins such as TON/ONDO have performed well. Do these market makers think that there will be no market in May and are trying to absorb liquidity and sell? Or is there another reason?
So, when will the new copycat coins, new dealers, and old dealers have a unified behavior trend? When will they be launched at the same time and have intensive coin transfer and withdrawal behaviors?
Before a signal appears, I don’t think the main uptrend has arrived, including the eth/btc exchange rate, which is currently just the first test. I think it only needs to trade around the lower boundary of 0.045-0.048 three times.
Therefore, I personally suggest that you observe some coins with strong trends, such as TIA, before the rebound to see if they can last for many times. Are there any abnormalities in volume and price after the rebound? At least you can make plans in advance to avoid scams.
Signals for the cottage industry in the next May and June:
Sports events activate the market:
The European Cup on June 15 and the Olympic Games in July are about to be held, and the related hype usually starts two months before the event. Representative projects worth paying attention to include SANTOS (parent-child endorsement by football stars), POR (endorsed by famous star Cristiano Ronaldo) and AGK (endorsed by football superstar Messi), including CHZ!
Major upgrades to Ethereum:
Ethereum Prague upgrade is expected to have a significant impact. Pay attention to OP, IMX, ETHFI, SSV, PENDLE and other currencies, which may gain market favor due to technical upgrades.
Important technical meetings:
Solana’s annual conference is scheduled for September. Pay attention to currencies such as JUP, PYTH, BOME, etc., which may become hot spots during the conference.
Corporate mergers and partnerships:
On May 2, OCEN, FET, and AGIX will announce the specific details of the merger. In addition, RNDR, WLD, ARKM, PHB and other currencies are also worth paying close attention to.
This period is an excellent opportunity for keen investors to find and seize undervalued, high-potential projects.
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