Brothers, don't rush to cut losses or blindly buy the dip! Recently, Bitcoin has dropped from 126000 to 87000, which is not a minor technical adjustment, but rather the global central banks are 'playing tug of war' behind the scenes, directly seizing control of the market! On one side, the 'siphon' of interest rate hikes in Tokyo has just started, and on the other side, the internal chaos of the Federal Reserve over 'easing expectations' is creating a twisted mess, pressing all risk assets down to the ground. Today, I'll explain in plain language what this storm is really about and how to respond next, as understanding trends in this market is 100 times more important than blindly guessing price fluctuations!
Let's first talk about the most powerful 'tightening force': this round of interest rate hikes by the Bank of Japan seems to have only increased by 0.25%, but in my view, this is not merely a numerical issue; it declares the complete end of a decades-long 'cheap money era'! Some new entrants may not know, but for the past twenty years, there has been an 'open secret' in the global financial circle: the yen is the cheapest 'financing tool'. In simple terms, Wall Street bigwigs and various funds borrow yen at almost zero interest with their left hand and exchange it for dollars or euros with their right hand to buy U.S. stocks, U.S. Treasuries, and the high-yield assets like Bitcoin that we are familiar with. This operation is called 'yen arbitrage trading' and is one of the 'water tanks' supporting global risk asset prices.
Now that the Bank of Japan has raised interest rates, what does it mean? It means the cost of borrowing yen has suddenly increased, and everyone feels that the yen is going to appreciate. This is a double blow for those institutions that borrowed massive amounts of yen for arbitrage: they now have to pay more interest, and exchange rate fluctuations may cause them to lose a lot of money. Their most rational choice is only one: to close their positions! How do you close positions? That means selling all the assets bought with borrowed yen and converting back to yen to repay debts. By this point, you should understand that the recent sharp decline in Bitcoin is not some 'Japanese retail investors dumping', but a passive and even panic-driven deleveraging by global macro funds! In the eyes of these big players, Bitcoin is not 'digital gold'; it is simply the highest quality 'liquidity tool' that can be quickly sold. If not sold first, who else to sell?
Looking at the other side, the drama at the Federal Reserve is quite intense, it's practically an 'internal division scene'. A few days ago, the U.S. CPI data came in lower than expected, and the market was excited, thinking the Federal Reserve would hastily cut rates. As a result, the dollar fell, gold rose, and Bitcoin jumped for a moment. But I told my friends at the time, this data looks good, but it's actually a 'signal flare with a gap'. The October data wasn't fully collected, who knows if this decline is a real cooling of inflation or just a mirage? Sure enough, there was immediate debate within the Federal Reserve: some officials felt 'there's no need to cut at all', while others thought 'the cuts are too slow', and the dot plot showed a 'slow descent', with everyone having their own thoughts.
So now the core contradiction in the market is very clear: can the Federal Reserve's vague expectations of easing withstand the global deleveraging pressures triggered by Japan's rate hikes? In my view, the short-term answer is very harsh; the power of tightening is directly greater than easing expectations! The market has already voted with its feet, which is also why Bitcoin has not risen with gold recently, but instead has fallen along with U.S. tech stocks.
Here I must emphasize a heartbreaking fact, which is my repeatedly verified viewpoint: in the current mainstream institutional pricing models, Bitcoin's 'risk asset' attribute far outweighs the so-called 'safe-haven asset' narrative. Many people previously believed it was 'digital gold', but this round of decline has shattered that illusion. When global liquidity tightens, whether it's Japan withdrawing or the Federal Reserve delaying interest rate cuts, Bitcoin will be treated as a risk position to be prioritized for reduction. This is not a collapse of faith; it's a reality written in real money, whether you accept it or not, it's here.
Let's talk about the technical aspects and market structure. Bitcoin has fallen from 126,000; this is no longer a simple adjustment but a dual damage to trend and confidence. The key price levels that everyone usually mentions, such as 70,000 and 94,500, I believe the focus is not on whether the numbers are accurate, but rather on what they represent in terms of the market's 'psychological defense line' and 'cost concentration zones'. Breaking below previous lows means the downward space has opened up; whereas at the 90,000 level, a large number of people are trapped, and whenever there is a rebound to this level, there will likely be a lot of selling pressure. The current technical situation is a typical bearish pattern; to recover, it either needs time or significant liquidity benefits, so don't have too much hope in the short term.
Another deep change that many may not have noticed: after the Bitcoin spot ETF was approved, the market is no longer the 'story-driven' market of the past. ETFs have indeed brought in funds from traditional institutions like BlackRock, but they have also tied Bitcoin more closely to the traditional financial system. The benefit is that there is now a long-term stable buying interest, but the downside is that market volatility now completely follows the macro cycle, with any fluctuations in global liquidity affecting it. Moreover, after institutionalization, funds will increasingly concentrate on core assets like Bitcoin and Ethereum, which have clear liquidity and fundamentals. The era where any random altcoin could skyrocket based on a story is long gone. Even in the next bull market, it will be structural, and differentiation will be particularly severe. Those hoping to 'get rich by blindly buying altcoins' should give up this idea as soon as possible.
Finally, let me summarize for everyone and share my core judgment: we are now at a crossroads of diverging global central bank policies. Japan has already begun tightening, Europe is watching from the sidelines, and the United States is wavering on 'when to cut interest rates'. This uncertainty itself is the biggest bearish factor.
In the short term, the pressure from arbitrage trades triggered by Japan's rate hikes has not been fully digested, and the market is likely to continue grinding; any early rebounds may present shorting opportunities, so do not blindly chase the rise. In the medium term, the trend depends on the result of the 'tug-of-war': if U.S. employment and inflation data weaken quickly, forcing the Federal Reserve to cut rates aggressively, then liquidity may return, and there will be opportunities in the market; but if the U.S. economy holds up, and the Federal Reserve remains still while Japan hints at further rate hikes, then liquidity contraction will continue to suppress risk assets.
Of course, I'm not saying that Bitcoin as an asset class is no longer viable; rather, its volatility will increasingly be bound to the global macro environment. Whether it can stand up in the future depends on whether it can prove to the market that, apart from being a 'risk asset', its so-called value storage and asset allocation functions have real weight, rather than relying on retail investors' faith to support it.
Finally, let me say something heartfelt to the brothers: the storm has already arrived. This round is not about cleansing the weak but redefining the rules of the game. In this market, those who understand the direction of the flow can avoid drowning; those who follow the macro rhythm can make money. The Federal Reserve's rate cuts are 'sugar rushes', while rate hikes are 'pulling the needle'. Those who do not understand this rhythm will eventually become the harvested lab mice.
From 1929 to 2008, and now, the script of the capital market has never changed: liquidity leads to rises, tightening leads to falls, followed by crises, reshuffling, and starting over. The only difference is that each round sees a new batch of people being harvested. History never rewards 'self-proclaimed clever' speculators; it only rewards those who are patient, understand logic, and dare to layout against the cycle. Great traders do not look at K-lines but at the pulse of the era.
I do not predict specific rises or falls; I only help everyone dismantle the underlying logic. If you want to keep up with the macro rhythm, avoid pitfalls, and find the right layout direction, click to follow so you don't get lost! I will continue to monitor the movements of the Federal Reserve and the Bank of Japan, as well as changes in market structure. If there are new judgments, I will share them with everyone at the first opportunity. Do you think the 70,000 level can hold next? Share your thoughts in the comments section, and follow me@帝王说币 #加密市场观察 $BTC .
