I am your old friend, Sister Xu. This week is Christmas week, and there are major events in the news. But the busier it is, often the more dangerous it becomes. I will clarify a few key things for you this week and tell you why I choose to continue waiting rather than rush in.
1. The biggest focus this week: Who will be the Chairman of the Federal Reserve?
The message screenshot states clearly that Trump may announce the candidate for the next Chairman of the Federal Reserve during Christmas.
Who is the most likely candidate now?
It is Kevin Hassett, the Director of the National Economic Council of the United States. The nomination probability given by the market is 54%, which is more than half.
Who is this person? He is a typical dove advocating for loose monetary policy. Just a few days ago, he publicly stated that inflation is below target and there is ample room to cut interest rates.
My views and feelings:
Beware of good news turning into bad news: Hasett's election is a short-term positive for the market because it strengthens expectations for next year's interest rate cuts. But the problem is that this expectation has already been speculated on by the market for a long time. Once he is actually nominated, this good news is realized, which may trigger a sell-off of profit-taking. Don’t chase high just because you see the news.
The Santa Claus rally may just be a fairy tale: Historically, the market rises more than it falls during Christmas week, with low volatility, hence the name Santa Claus rally. But this year is different; the uncertainty surrounding the Fed Chair is laid out before us, combined with various important data releases, volatility is likely to intensify rather than calm down.
II. Two economic data points that must be closely monitored
In addition to the personnel, there are also two data points this week that can directly test the results of the U.S. economy and interest rate cuts.
U.S. third-quarter GDP (to be released Tuesday): This is the most important data for measuring the overall state of the U.S. economy. If the data is strong, the market may worry that the economy is doing so well that the Federal Reserve might not rush to cut interest rates, which would be a short-term negative for the market.
If the data is weak, it may instead strengthen expectations for rate cuts, which would be a short-term positive.
U.S. core PCE price index (to be released Tuesday): This is the inflation indicator that the Federal Reserve values most, even more important than CPI. It directly relates to the Fed's judgment on inflation. If this data rebounds, even if just slightly, it could severely impact market expectations for interest rate cuts. This data is a bomb; it must be closely monitored.
My core viewpoint:
This week, the Fed Chair's comments and the economic numbers are conflicting. Hasett's dovish remarks are emotionally positive, but GDP and PCE data are cold realities. If the data performs poorly, no dovish comments will save short-term market sentiment. Large funds will choose caution this week rather than taking risks.
III. Survival guide for retail investors in the crypto world this week
Facing a week filled with news, potential amplified volatility, but where large funds may choose to wait and see, my strategy is very clear:
Lower your expectations, control your hands: This is not a week suitable for aggressive trading or chasing volatility. The core focus is on risk aversion and observation.
Specific operational ideas:
If your position is heavy: take advantage of the market's optimistic sentiment towards the Hasett news. When Bitcoin tests the 95,000-96,000 resistance zone and Ethereum tests the 3050-3100 resistance zone, reduce part of your position to lock in profits. Bring your position down to a level where you can sleep at night.
If your position is light or if you are out of the market: absolutely do not chase the rise. The real opportunity is likely to appear during the pullback caused by the exhaustion of good news or negative data. Be patient and see if BTC can return to around $85,000, and whether ETH can return to around $2,900 strong support area. Don’t shoot until the right position.
If you're in contracts: reduce leverage, or take a break. The momentary fluctuations caused by this week's data are enough to wipe out unreasonable high-leverage positions.
Regarding altcoins: be even more cautious. Mainstream coins are precarious under such macro uncertainty, and the volatility of altcoins will be amplified. It is advisable to keep altcoin positions at extremely low levels.
To summarize my personal feelings and judgments:
I am currently cautious and even a bit worried. On the surface, the positive news (Hasett) is in sight, but the landmines (economic data) beneath my feet have not been dismantled. As a trader who has crawled out of countless pits, I know that surviving is more important than making money at such times.
The market's money is never-ending, but your principal can be completely lost. This week, let us be calm observers rather than fervent gamblers. Wait for the situation to clarify, wait for the winds to calm, then go fishing; it’s never too late.
Remember Sister Xu's words: In the crypto world, seeing opportunities is important, but seeing risks is even more important.
Alright, the specific defensive and observation points are laid out here. But the real decisive factor is hidden in the details that most people overlook. My core position has been adjusted; I’m just waiting for a signal. What is this signal? I will share it at the first moment it appears inthe core circle. Follow me so you don’t miss the sound of the real starting gun.
