The current situation is: The Bank of Japan (BOJ) is highly likely to raise interest rates on December 19th (next week). Although everyone is prepared for it, 'expectation' and 'reality' are two different things.
The current market is like a tightly stretched rubber band; don't go all in before next week's meeting ends. The current strategy is: reduce leverage, save yourself, and wait for opportunities.
1. Why is everyone afraid of Japan's interest rate hike?
This matter must start from 'borrowing money'.
For the past few decades, Japan's money has been the cheapest in the world (almost zero interest). What have the big players been doing?
* Borrowing yen (super cheap)
* Exchange for USD/buy coins (speculate for high returns).
This is called 'Yen arbitrage trading'. Now Japan says it will raise interest rates, making borrowing more expensive!
* Consequence: Those big shots who borrowed yen to buy coins must sell their coins and convert back to yen to repay their debts.
* Result: The coin price has been smashed.
️ Warning: The interest rate hike in July 2024 caused Bitcoin to plummet by 23%, resulting in a liquidation of $20 billion. Although everyone is psychologically prepared this time, as long as there is leverage involved, there is always a risk.
2. What is the current situation of several mainstream coins?
The current market is 'murky', but different coins have different resilience to shocks:
* Ethereum (ETH) —— highest risk.
* Why: ETH is the foundation of DeFi, and too much leverage has been piled on top. Once the market turns bad, this is the most likely place to experience a 'chain liquidation'.
* Bottom line: See if the 2,600 position can hold. If it can't hold, it will continue to drop.
* Solana (SOL) —— relatively resilient.
* Why: Asian funds prefer it, and liquidity is quite good.
* Bottom line: Pay attention to the support around 120.
* BNB —— relatively the most stable.
* Why: Binance's ecosystem is strong, and there has been recent good news regarding RWA (real-world assets) supporting it.
* Strategy: If other coins are crashing, BNB might be a 'safe haven' for funds.
3. What should be done now? (practical advice)
Since the results will only be out next Thursday (19th), the few days in between will be the hardest to endure, the 'calm before the storm'.
1. Reduce leverage (most important!).
* If your current contract leverage exceeds 3 times, hurry up and lower it.
* Leave some margin in the account (for example, reserve 150% of the maintenance margin) to prevent being mistakenly liquidated by the system.
2. Don't blindly try to catch the bottom.
* The current decline is a 'macro bearish' situation, unreasonable. Don't rush in to catch falling knives just because it has dropped a little.
3. Focus on two prices (BTC).
* Defense line: 85,000 —— if it falls below this, a trend change is likely.
* Lifeline: 80,000 —— if it reaches this, the bulls are basically gone.
4. Bottom-catching opportunity.
* If interest rates are really raised next week (the shoe drops), and Bitcoin doesn't fall below $82,000, that would be a good opportunity to enter the market in batches.
In summary:
Those holding coins should hold steady, and those with leverage should hurry to reduce their positions. Surviving until next Thursday means being a winner.
