The cryptocurrency market is currently at its most delicate moment of the year. Bitcoin continues to hover around $88400, while Ethereum fluctuates around $3016. On one side is the macro risk aversion surge with gold skyrocketing to a historic high, while on the other side is the outflow of funds from the crypto market and massive option settlements. Both bulls and bears meet in the critical Christmas week, and a directional choice that will determine the trend for the end of the year and even early next year is about to be revealed.
Yesterday, Jiang Feng's article clearly pointed out to continue focusing on short positions. Let everyone participate in short positions around 89500 to 90600. The price peaked at around 90600 before starting to retrace, with an average price near 90,000. In the evening, it approached around 87880 before starting to rebound. Let everyone participate in short positions around 3060 to 3080. Subsequently, the price reached around 3078 and started to retrace again in the evening, also touching the important support level of 2960 mentioned in the article, which is our first target! So there is a lot of profit space. Therefore, our trading strategy for the day remains unchanged, continuing to focus on short positions. Specifically, we need to find answers in the market! Remember to patiently read to the end! Interaction is key, and your likes are my biggest motivation for updates! Back to the main topic, let’s analyze the market together with Jiang Feng!
1. Macro fundamentals: Heightened risk-averse sentiment, crypto market 'unexpectedly out of favor'
This week's macro picture presents obvious contradictions and disconnections, which directly explains why Bitcoin remains 'inactive' in what seems to be a favorable environment.
1. The aftermath of inflation adjustments: Last Friday, the U.S. Bureau of Labor Statistics revised the December CPI monthly increase down from 0.3% to 0.2%, while revising the November data upwards. Although this 'correction' solidified the trend of slowing inflation, it also made the market aware of the repetitiveness of the data. Before receiving 'clear data pointing to sustained declines in inflation over several months,' capital remains cautious about increasing risk exposure.
2. The truth about capital flows: A weakening dollar and a decline in U.S. Treasury yields should have been a tailwind for risk assets. However, the reality is that capital is massively withdrawing from crypto assets. Data shows that last week, the overall net outflow of digital asset investment products reached $952 million, marking the first reversal after four weeks of inflows. Among them, Bitcoin ETFs saw a net outflow of about $148 million yesterday, with a total net outflow of $467 million over three days, while Ethereum ETFs had a net outflow of about $76 million. In stark contrast, gold and silver prices are soaring, reaching historic highs. This clearly indicates that in the year-end risk-averse sentiment, traditional precious metals remain the preferred choice for capital, while the risk asset attribute of cryptocurrencies makes them temporarily 'out of favor.'
3. Massive tremors in the options market: This Friday (December 26), the Bitcoin market will face the largest options expiration in history, with a total nominal value of $24 billion. The current focus of the long-short battle is highly concentrated: bullish options (longs) are generally betting on prices breaking $100,000, while bearish options (shorts) are heavily defending the $85,000 mark. The result of this showdown is likely to become the catalyst for breaking the current stalemate.
2. In-depth technical analysis: Dangerous balance on key support
Bitcoin: Key support and resistance levels
On the weekly level, there is resistance near $94,000 and the baseline at $10,400. Below, the $80,000 mark is supported by the top of the Ichimoku cloud layer. On the daily and hourly levels, the price is oscillating between strong support at $84,000 and key resistance at $94,000. Above, there are resistances from the baseline and Bollinger midline near $89,200–$89,500, and Fibonacci 0.618 near $90,600, as well as the top of the cloud layer near $91,400. Below, support is strong near the conversion line and Fibonacci 50 near $87,500, with further supports at $86,800 and levels below: $85,600–$84,400–$83,800–$80,600–$78,500!
Specific strategy: For Bitcoin, sell in batches near 89200–90600–91400, with a stop loss above 91800. If you cannot accept wide stop losses, it is advisable to reduce your position! The targets are in batches at 87500–86800–85600–83800–80600–78500.
Ethereum: Key support and resistance levels
From the chart alone, the head and shoulders pattern has still not been broken, so the neck line at the 3030–3080 range remains effective. From the daily chart, there is minor resistance around 3030, and then the 3060–3080 range is under pressure from the cloud layer as well as the Bollinger midline and baseline. Therefore, there will be significant selling pressure here, and everyone must pay close attention; if it can't effectively break through here, it will be hard to rise. Additionally, there's resistance near 3110 from the top of the cloud layer and the Fibonacci 50 level. The primary support to watch below is around 2960, and then the 2925–2915 range. If it breaks effectively, then look again at 2840–2750 after reducing positions by 80% before trying to play near 2630.
Specific strategy: For Ethereum, buy the initial position at 3030 and add once in the 3060–3080 range, add some more near 3110, with a stop loss to be controlled above 3190. If you cannot accept wide stop losses, it is advisable to reduce your position! The targets are sequentially 2960–2840–2750, reduce the position by 80%, and continue to play near 2630!
Key points to note this week:
1. Huge options expiration: This Friday's options expiration is the biggest uncertainty and may trigger violent fluctuations and 'spike' markets before and after expiration.
2. Liquidity scarcity: During the Christmas and New Year holidays, market liquidity typically decreases, which may amplify price volatility.
3. Strictly implement risk control: All strategies must be accompanied by strict stop losses and position management. At this critical turning point, it is better to miss out than to make a mistake.
4. Discount code for transaction fees: BTC20242
This Christmas week, Bitcoin is not 'falling behind,' but is undergoing a critical 'structural test.' The bulls' tenacious defense above $84,000 deserves respect, but if they cannot break through the resistance at $94,000 in the short term (1-2 weeks), the risk of a prolonged downturn will sharply increase. In contrast, Ethereum, with its improved fundamentals and technical breakthroughs, shows better short-term momentum. Traders should abandon simplistic fantasies about the 'Christmas rally' and instead focus on the key price levels mentioned above, allowing the market to determine its direction.
Author: Jiangfeng Capital
