Viewpoint: BTC may enter a medium-term bearish trend.

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24-01-11 16:20

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Original author: Ri Yue Xiao Chu

Editor's note: At 4am today, the US SEC announced the approval of 11 Bitcoin ETFs. At 7am, Bitcoin briefly surged past $47,000; at the time of writing, the price has fallen back to $46,102. The approval of Bitcoin ETFs did not bring a significant increase in BTC prices. In response, KOL Day and Night Xiao Chu in the cryptocurrency field shared his thoughts on X. BlockBeats has compiled the full text below:

【Multiple signs at the top have emerged, and a medium-term downtrend may be imminent】

The United States has passed a spot ETF, and the market is calling it the arrival of a new era, which I strongly agree with.

Long-term trend-wise, BTC has entered a bull market. However, in terms of mid-term trend, it will experience a downward trend in the next few months.

Question 1: Reasons for the formation of the top

1) There is a lot of profitable capital, which is a prerequisite and means that there is significant selling pressure in the market. After nearly three and a half months of market trends, most coins have already experienced a general rise. Some coins, such as Mingwen, have increased by several tens of times, while others with medium market value have increased by 10 times, and those with large market value have mostly increased by 2-3 times.

2) The funding has been depleted and the main funds have started to withdraw.

In December, we experienced a series of market rotations, including the surge of inscriptions, the explosion of Sol, the Depin market, Layer2, and the Polkadot ecosystem. It is evident that the upward momentum is gradually decreasing. When the subsequent sectors rise, the previously rising sectors will begin to decline. This is because the buying power is exhausted, and the market is mostly in a full position or leveraged state, requiring the sale of one coin to buy a new one.

These two phenomena can clearly indicate that the purchasing power of funds is constantly declining. From the perspective of funds, a market trend will go through three stages: 1) the successive landing of empty funds, 2) the exhaustion of landing funds, and the internal fund game, 3) profit-making funds understand and main funds withdraw. This means that in reality, the money left at the gambling table is getting smaller and smaller.

3) Retail investors in the market are generally bullish.

Currently on Twitter, there are no KOLs expressing bearish sentiments. The most common view is that the price will adjust to 42,000 RMB and then continue to rise. Within various chat groups, the sentiment is also mostly bullish, with generally heavy positions. It is a cruel fact that retail investors are often the last ones to buy in. This means that when all the retail investors have heavy positions, there will be no more funds available to buy in.

In simple terms, there is a strong divergence between bullish sentiment and actual funding situation.

Question 2 about BTC spot ETF

1) The spot ETF of BTC is a substantial positive development in the long term, as it can bring in more funds to purchase BTC. In the short term, it is a positive development in terms of news. It will stimulate the price of BTC in the short term. However, we must be aware that the approval of ETF does not necessarily mean an immediate influx of off-exchange funds for purchasing.

Spot ETF is just a purchasing channel, although this channel connects a large number of powerful funds. These are experienced funds, and they think whether to buy or not depends on whether there is a suitable position and a suitable price. Therefore, after being able to purchase in compliance, they still need to determine whether the position of BTC is worth entering. So, I think ETF is a bit like Grayscale's GBTC in 20 years. They are boosters of the bull market, but they are not the reason for starting the bull market.

2) This round of market trends was initiated by ETF. If you recall three months ago, it is unlikely that anyone in the market would have expected BTC to rise to 48,000. This height is not much different from the highest point of the bull market in 21 years. Because the expected 25-year bull market is still far away, and from the perspective of external financial markets, the Federal Reserve is in a cycle of interest rate hikes. So it is clear that some insiders and accurate analysts who have judged the situation have seen the ETF pass and promoted this trend. Therefore, when the ETF passes as scheduled, it is the time for them to profit and settle.

Question 3: Mid-term trend deduction and trading strategy

What position should be adjusted during the downward trend in this mid-term trend?

It's hard to say, BTC may experience a correction of around 20% to 30%, which will attract a lot of sidelined funds. However, it may not be the case for altcoins, which will likely experience a more severe correction, especially those with significant gains. A deep correction is normal. Moreover, if the external market is not good, such as a major crash in the US stock market, the correction of BTC will be much higher. There is also the possibility of another 312 incident.

Trading Strategy

1. In terms of position, it varies from person to person based on individual risk preferences. Generally, reserving positions between 2 to 6 layers is recommended, especially for long-term holdings. For those with higher risk preferences, it is advisable to reserve more positions.

2. If the position is heavy, you can sell in the next few days to reduce the position. It is important to note that you should not choose to sell for profit, but rather keep the losing positions as the standard. This is a very incorrect approach. You may consider...

1) For those who want to hold long-term positions, it is recommended to keep more.

2) Coin No.1 has been experiencing a significant decline since the beginning. Although it has rebounded due to positive news, it is recommended to sell. This is because the main funds have already sold off, and there are many trapped investors holding onto it. It is often difficult for such coins to reach new highs again.

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