Market sentiment is polarized. I stick to my trading system and remain cautious when others are greedy.
Yesterday afternoon's market provided me with many opportunities as a trader.
Bitcoin began to retreat after rebounding above 90,000. My thinking at that time was to go short here. The price has now returned to around 87,400. This wave has brought in 2,500 points, and the execution of the order went quite smoothly.
ETH's performance has also been quite cooperative, starting from the short position at 3,050, and it has now dropped to 2,960, with a cumulative drop of 90 points. The short position is progressing as planned.
01 Current market status: key node of long and short game
The market is currently in an interesting phase. Bitcoin has built a new volatile platform in the $87,500-$89,600 range, with bulls and bears engaged in a tug-of-war at the $88,000 mark.
This narrow range of fluctuations is a typical characteristic of holiday markets, with trading volume decreasing and volatility narrowing.
From a technical perspective, Bitcoin's price is operating below the 50-day moving average (about $91,000), facing short-term pressure, but has found support near $87,000, forming a volatile platform where long and short forces are balanced.
The market sentiment index is in the 'extreme fear' range, with values only at 16-24. In my experience, this is usually a contrarian indicator, meaning the market may be overly pessimistic.
02 Why do I insist on a bearish outlook?
Many people ask me why I don't follow the mainstream bullish view? My reason is simple.
Key resistance levels have not been effectively broken. The $89,700 to $90,000 area above Bitcoin constitutes strong resistance. Only by truly stabilizing at this position can upward space be opened. The rebound yesterday afternoon was precisely blocked and fell back in this area, confirming the effectiveness of the resistance.
On-chain data shows that although long-term holders are increasing their holdings, short-term selling pressure still exists. The net flow on exchanges is close to neutral, with buyers and sellers temporarily in a balanced state. Once this balance is broken, volatility will intensify.
On a macro level, the Fed's hawkish tone is strengthening. Cleveland Fed President Loretta Mester has made it clear that there is no need to adjust interest rates in the coming months. At the same time, the effects of the Bank of Japan's interest rate hike continue, and global liquidity tightening is putting pressure on high-risk assets.
03 Divergence between market sentiment and actual trends
I have noticed an interesting phenomenon: although most people have begun to turn optimistic, funds are quietly flowing out.
The outflow of Bitcoin ETF funds continues. Although the net outflow scale has narrowed recently, the overall direction has not changed. Meanwhile, institutional investors are rebalancing their portfolios at the end of the year, which may bring unexpected market volatility.
From the perspective of trader positions, the open interest in Bitcoin futures continues to increase, currently approaching $58.84 billion. This indicates active leveraged trading, and once prices experience reverse fluctuations, it may trigger a chain reaction of forced liquidations.
04 Upcoming trading plans
I maintain a cautious attitude towards the upcoming trends.
I will closely monitor two key levels: $89,500 above Bitcoin and $86,800 below. Only by effectively breaking through the boundaries of this range will I consider adjusting my current bearish outlook.
For friends who want to buy at the bottom, I believe more patience is needed. The market may form strong support in the $70,000 to $80,000 range, which is a liquidity vacuum area and a better risk-reward entry point.
Personally, I will adhere to the mindset of 'trading in a volatile market'. Before the market has a clear direction, I will control my positions and set strict stop-losses.
05 Summary and risk management
Trading is not about seizing every opportunity; it's about avoiding major failures. In the current environment, I choose to miss out rather than make mistakes.
Time will prove everything; the market will always provide answers. What we need to do is not predict the market but prepare for various situations.
Set good stop-losses, control your positions, and then let the market speak for itself. After all, surviving in this market for a long time is more important than making more in the short term.
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