Amidst the panic in the market, the wallets of the whales are quietly growing fatter.
I just bottomed out at $80,000, and it dropped to $70,000! Should I cut losses or add to my position? Recently, my private messages have been flooded with such questions. Looking at the blood-red numbers in my account is indeed nerve-wracking. But when I opened the on-chain data, I discovered a completely different story: just when retail investors were panic-selling, institutional investors were accumulating Bitcoin at the fastest pace in nearly six months.
This extreme polarization reminds me of a saying by legendary trader Peter Brandt: 'When market sentiment shifts from one extreme to another, it often signals that a turning point is imminent.'
01 Market sentiment has reached a freezing point, and the timing for contrarian positioning is emerging.
Over the past six weeks, the cryptocurrency market has indeed staged a "roller coaster" ride. Bitcoin has dropped about 31% from its historical peak at the beginning of October, at one point falling below the $88,000 mark. On December 15 alone, the total liquidation amount across the network reached $270 million, with over 110,000 investors being forcibly liquidated.
Interestingly, this panic selling has created opportunities for contrarian investment. Based on historical data, when Bitcoin falls 25%-30% from its peak, it usually indicates a phase of bottoming.
Currently, there are three key indicators in the market worth paying attention to:
The fear and greed index has dropped to 16, entering the "extreme fear" zone. Historically, buying Bitcoin when this index falls below 20 has yielded an average return of over 80% after one year.
The daily RSI of Bitcoin shows oversold conditions. Although there may still be fluctuations in the short term, the long-term investment value is gradually becoming apparent.
The deleveraging process is nearing its end. Unlike the October crash, this round of decline has not been accompanied by large-scale cascading liquidations, indicating that market leverage has significantly decreased.
02 What are the whales and institutions quietly doing?
In stark contrast to retail behavior, the actions of institutional investors reveal different signals.
MicroStrategy has set aside $1.4 billion in reserves to cover dividend payments, avoiding the forced sale of Bitcoin holdings due to liquidity pressure. This move effectively alleviates market concerns about concentrated selling pressure from institutions.
On-chain data also provides strong evidence:
On the morning of December 3, 1,800 Bitcoins were transferred from Fidelity's custody address to two anonymous wallets; such large transfers often indicate that institutions are adjusting their positions.
Despite a withdrawal of $2 billion in a single week in November, the current cryptocurrency ETF assets account for 6.6% of Bitcoin's total market value.
Last week, the U.S. Bitcoin spot ETF saw a cumulative net inflow of $73.2 million, while the U.S. Ethereum spot ETF saw a cumulative net inflow of $312 million, indicating that institutional funds are beginning to flow back.
These behaviors confirm the famous saying of investment master Warren Buffett: "Be fearful when others are greedy, and be greedy when others are fearful."
03 The macro positives for cryptocurrencies remain unchanged.
Although short-term market sentiment is low, macro positive factors for cryptocurrencies still exist.
The Federal Reserve officially ended quantitative tightening on December 1, halting the process of reducing its balance sheet that began in 2022. Although the positive effects of this major shift will take time to manifest, it has eliminated a structural resistance in the market in the long run.
At the same time, market expectations for a Federal Reserve easing cycle in 2026 are strengthening. If the U.S. economy continues to slow down, the Federal Reserve may cut rates multiple times in 2026, providing liquidity support for risk assets.
The regulatory environment is also gradually improving. The U.S. Securities and Exchange Commission is discussing rules for tokenized securities, Texas has taken the lead by allowing BlackRock to purchase Bitcoin through an ETF, and Thailand has implemented a 0% capital gains tax on Bitcoin trading on exchanges; these measures are accelerating the integration of traditional finance and the crypto world.
04 How should smart investors position themselves currently?
For ordinary investors, I recommend adopting the following strategies to cope with the current market:
Adopt a batch buying strategy
Attempting to precisely catch the bottom is almost an impossible task. A wiser approach is to:
Divide funds into 3-5 batches and accumulate positions at key support levels. For example, Bitcoin can be considered for accumulation in the range of $83,000 - $88,000.
Prioritize allocating Bitcoin and Ethereum. Mainstream assets tend to be more resilient during periods of high market uncertainty.
Set strict stop-loss lines, such as 5% of total funds or a 15% drop from the purchase price, to control the maximum risk of a single trade.
Pay attention to the two key signals
The two key indicators I am closely tracking are:
Institutional position changes: By monitoring whale addresses and ETF fund flows, we can gauge the movements of large funds.
Support level verification: When the price touches key support levels and trading volume increases, it is often a sign of a rebound.
Avoid common psychological pitfalls
Blindly chasing highs and cutting losses: Selling in panic during market fear and chasing highs during market euphoria are the main reasons most investors incur losses.
Over-leveraging: High leverage can easily lead to liquidation in volatile markets, especially during periods of low liquidity.
Ignoring risk management: Do not invest all your funds into high-risk assets; the proportion of cryptocurrencies in your portfolio should be kept within a bearable loss range.
In the short term, market attention will be focused on tonight's U.S. CPI data. This data may bring additional volatility but could also act as a catalyst for a rebound.
Real investment is not about following emotions, but about seeing the cycles clearly. After the storm, the best chips often belong to those who have patience and faith.
Every deep market correction is an opportunity for wealth redistribution, and this time may not be an exception. While most people are still lingering in panic, those who can rationally analyze data and strictly follow strategies have already started their layout.
There's no need to worry about missing the lowest point; "It's better to be vaguely right than precisely wrong." Successful investment is not about whether you can buy at the lowest point, but whether you can survive until the market reaches the next high point.
In the coming week, I will focus on the Federal Reserve's policy trends and changes in on-chain data. In particular, the movements of whale wallets and the flow of funds in exchanges often provide early indications of market turning points.
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