Funds start to return, buy at low prices, and wait patiently for a rise

Here is the English translation: Followin' the Christmas and New Year holidays in Europe and the US, the cryptocurrency market has experienced a brief decline, with Bitcoin falling from $100,000 to a low of $92,000. However, with the end of the holidays, significant capital inflows from Europe and the US have boosted Bitcoin's rebound to $98,000. Meanwhile, funds within the existing cryptocurrency market have started to flow into mainnet tokens and DeFi concept tokens. Ethereum has surged above $3,600, and other DeFi tokens have also performed well, breaking the previous dominance of Bitcoin. The main reason for this structural change is quite understandable. The price trend of the past two weeks has shown that the trend of Bitcoin's dominance is waning. This is mainly due to a weakening of investor demand, especially among US market participants. Before the Christmas holidays, the Coinbase premium index, which indicates demand, fell to -0.237, the lowest point since December 2023. Furthermore, there has been an outflow of capital from the US Bitcoin spot ETF market, with around $700 million lost in two trading days, and even on the day of capital inflow, there was only a net inflow of $5.3 million. In the four days before Christmas, these ETFs saw a net outflow of over $1.37 billion, indicating that institutional and retail investors were settling their positions before the holidays, with short-to-medium-term investors choosing to take profits. As the main buyers in the cryptocurrency market last year, the strength of European and American investors will naturally weaken after the holidays. However, once they return to work, traders will resume buying cryptocurrencies, and the selling pressure executed before the holidays will not be dragged out. The above data confirms this assumption, and the return of European and American investors to the buy-side is a highly predictable phenomenon after the holidays. If traders expect the market to rise after Christmas, this is a short-term phenomenon, as traders are mostly replenishing their positions or making regular purchases, and the duration will not be too long. Therefore, most investors adopt a short-term strategy at this time, using high leverage to position in small and medium-sized cryptocurrencies and waiting for the capital inflow after the return to work, when the high-leverage strategy will reap substantial returns, similar to the current speculative theme. Additionally, the market is anticipating that the "regulatory relaxation" of the cryptocurrency market before Trump's inauguration will continue. In this case, investors are betting that DeFi and related mainnet tokens will be the main targets of capital inflows, as cryptocurrency companies and investors are eagerly awaiting further regulatory relaxation from the new government. DeFi concept tokens have become the focus of market attention, and their future potential remains strong. The two themes this week are "mainnet tokens" and "DeFi". The mainnet tokens that have benefited include SOL, AVAX, and ADA, as the market believes these native currencies have the potential to surpass the Ethereum ecosystem. This is especially the case if the Trump administration further relaxes the "fundraising" attributes of DeFi tokens, leading to rebounds of over 10% to 20%. These mainnet tokens have all benefited from similar themes, as they have well-developed DeFi ecosystems that allow issuers to launch new staking projects, making them the primary beneficiaries of this upward trend. Investors are anticipating the regulatory relaxation theme to drive price increases, and the high liquidity of these mainnet tokens also helps traders to earn higher profits through short-term high-leverage strategies. With Trump's inauguration on January 20th, the imagination space for subsequent policies is still vast. Considering that European and American investment companies have just returned to work, there is likely to be more capital inflow into the market, and "regulation" remains a focus for capital. However, the current capital outflow is somewhat severe, and the overall bull market is not entirely healthy. Nevertheless, DeFi concept cryptocurrencies still have short-term upside potential. Looking at the K-line, Bitcoin is still consolidating at high levels with decreasing volume, and it is prudent to wait patiently for the direction to emerge. With the FTX compensation and the expectation of Trump's inauguration, $100,000 is inevitable. Ethereum is also slowly recovering, and its catch-up rally is just a matter of time. As for altcoins, they currently lack both sustainability and rotation. In contrast, Bitcoin and Ethereum have been following the strength of ETFs. The altcoin season will have to wait.