The reason for yesterday's sharp drop early in the morning
It is highly likely due to the possibility of the Bank of Japan raising interest rates, and as for the impact of domestic policy measures, I actually think it is less significant than the Bank of Japan's potential rate hike.
Let's explain why we should pay attention to whether the Bank of Japan will raise interest rates in December
The yen is actually an important 'supplier' of global dollar liquidity. A lot of capital is borrowed in yen at low interest rates and then exchanged for dollars to invest in markets with higher returns; this is typical carry trade. However, if Japan raises interest rates, these arbitrage positions will have to be forcefully closed, and liquidity will be quickly drained.
Many people may not realize the importance of Japan's interest rates, thinking that global liquidity is mainly determined by the Federal Reserve, but in reality, Japan's ultra-low interest rates are one of the 'faucets' for global capital. Once interest rates are raised, the faucet will be tightened, and global markets will have to follow suit.
On March 19, 2024, the Bank of Japan raised interest rates, and the bull market in U.S. stocks and the cryptocurrency market came to a halt. On July 31, 2024, the Bank of Japan raised interest rates again, and Bitcoin dropped from 62,000 to 49,000. Therefore, closely monitor the actions of the Bank of Japan in December.
After the interest rate cut in December, there will be a pause in rate cuts until February next year. During this period, the overall market direction will largely be bearish. There is a high probability that there will be a rebound around the December Federal Reserve interest rate cut before another drop. Currently, there is a key variable: if Japan really raises interest rates, it would be a significant blow to global risk assets. If that happens, the market situation from the Federal Reserve's interest rate cut in December to January will indeed be very challenging.
Looking back at the market
Currently, the $BTC weekly support is still around 74000, and this range will eventually be tested repeatedly. The daily chart is in a fluctuating pattern. To be honest, if I were a major player, I wouldn't accumulate in the 80000-90000 range because retail investors are not desperate enough in this range.
From a short-term perspective
BTC: First look at the 80000 range; if it breaks, watch the 75000 range.
ETH: 2723 could be a short-term buy, but it may drop to 2688. This is basically the range, but it can only be considered for a short-term long position.
If you really want to bottom-fish, a relatively reliable level for ETH is at 2620, with a stop loss at 2500. However, if it breaks 2500, then we have to look directly at 2112. The current market situation is like this: if you haven't opened a short position at high levels, it's better to wait until it breaks key support levels before shorting, because there is still the favorable factor of the Federal Reserve's rate cut in December, and the market could rebound at any time.
