1. Review of Trading Strategies
Passing on the trading philosophy, enjoying a wise life.
In the past day, the performance of several cryptocurrencies, including S, IP, and MKR, has been outstanding.
S: The price surged strongly by 25%, climbing from 0.57 to 0.75, successfully reaching the target level, and currently has a high probability of challenging the previous high of 0.84 USD, demonstrating strong upward momentum.
IP: Also performed well, starting its upward journey from 1.36, and yesterday it rose another 50%, briefly touching the historical high near 2.90. However, it is worth noting that the current funding rate for this cryptocurrency is severely negative, and bearish sentiment is gradually intensifying in the market. For investors holding IP, this may be a good time to take profits and exit, as securing gains is a wise choice.
MKR: The trend is very strong, with four consecutive days of bullish candles, and daily gains between 8% and 9%. If it can successfully break through the 200-day moving average today, the likelihood of continued bullish momentum is very high, so keep a close eye on this key point.
2. Fundamental Factors Affecting Market Sentiment
Yesterday, the Federal Reserve's monetary policy minutes from January 2015 became the market focus. The minutes indicated that the Federal Reserve is maintaining the original interest rates, with the range remaining stable at 4.25% to 4.5%.
This decision has had various impacts on the market: from a monetary perspective, it is favorable for the US dollar index, while it is bearish for gold and cryptocurrencies.
The outflow data of Bitcoin ETFs can intuitively reflect the changes in market sentiment. Since February 6, Bitcoin ETFs have been continuously flowing out, resulting in a net outflow of funds.
This phenomenon indicates that, in the medium to short term, investors in the market generally hold a bearish attitude towards cryptocurrencies. Therefore, for those with heavy positions, if a market rebound occurs, it is essential to timely reduce positions to avoid potential risks.
3. Technical Analysis
Currently, a highly concerning question is: Has the Bitcoin bull market ended? Has the bear market begun? What investment opportunities lie ahead? Let’s analyze this from a technical perspective.
1. Key Indicators for Judging Trends
To determine Bitcoin's long-term trend, two important indicators are indispensable: the 50-week moving average and the MACD indicator.
The 50-week moving average is a crucial trend indicator. When Bitcoin's price is above the 50-week moving average, or the moment it breaks through the 50-week moving average, it signifies the start of a bull market, establishing a long-term upward trend.
The most recent breakthrough of the 50-week moving average occurred on March 13, 2023, marking the beginning of a two-year bull market cycle for Bitcoin. After the breakout, Bitcoin's price surged, first breaking through 23,000, then retracing to 25,000, and subsequently breaking through 25,000 again, continuing to rise to 54,000, and after a brief pause, climbing to 110,000 USD.
During this period, Bitcoin twice approached the 50-week moving average, at 25,000 and 50,000 USD respectively. This time, various signs indicate that Bitcoin's price is likely to fall back to the vicinity of the 50-week moving average, with an approximate price range of 74,000 - 78,000 USD, where 78,000 USD is precisely the position of the futures gap.
Looking at the MACD indicator, on a weekly level, if both the fast line and the slow line cross above the 0 axis, it is a significant bullish market trend indicator. Since Bitcoin's price broke through the 50-week moving average in March 2023, the fast and slow lines of the MACD indicator have also crossed above the 0 axis and have remained there since, consistently staying above the 0 axis.
This clearly indicates that Bitcoin is still in a bull market. However, we cannot ignore some potential risk signals. Currently, the MACD indicator at the weekly level has formed a death cross and may be forming a double top structure, while divergence phenomena and deviation rates continue to exist.
These technical signals suggest that there is a technical demand for downward adjustment in Bitcoin in the medium to short term. The expected target for the pullback is near the 50-week moving average, around 75,000 USD, and this adjustment period is expected to last about 2 to 3 months, or even longer.
Therefore, investors must remain cautious in the face of market fluctuations. When the market rises, remember to reduce positions and wait for a retracement before considering entry points.
2. Historical Market Validation of Indicator Effectiveness
Looking back at historical market trends, we can see more clearly the effectiveness of these two indicators in determining Bitcoin's trend.
The last bull market started on May 4, 2020, after which Bitcoin's price broke through 9,000 USD and climbed to 69,000 USD before ending. After the price broke through 50,000 USD, the MACD indicator's fast and slow lines gradually crossed above the 0 axis in the following week.
Until November 2021, when Bitcoin reached its historical double top high and the price fell below the 50-week moving average of 49,000 USD, this not only signified the end of this bull market but also marked the MACD indicator crossing below the 0 axis, thus initiating the bear market from November 2021 to March 2023.
Bringing the time frame back to 2015, after Bitcoin's price broke through the 50-week moving average, the corresponding MACD indicator also gradually crossed above the 0 axis in the following weeks. Subsequently, the price soared from 360 USD to 20,000 USD, during which the MACD indicator remained above the 0 axis, undoubtedly signaling the start of a long-term bull market.
It wasn't until the price fell below 6,800 USD, with the MACD indicator's fast and slow lines crossing below the 0 axis, that this bull market ended, leading to the bear market from 2018 to 2019.
From historical experience, Bitcoin's price has repeatedly touched the 50-week moving average, and each time it has continued to rise after a pause, but the consolidation periods are often lengthy. The last time Bitcoin touched the 50-week moving average at 25,000 USD, the consolidation lasted for 210 days. This time, the adjustment period starting in March 2024 is also expected to last around 210 days, or about 8 months.
As for whether Bitcoin's price will continue to consolidate for 6 to 8 months, it is currently difficult to make an accurate judgment, but everyone must be fully mentally prepared. Given the current situation, the likelihood of Bitcoin breaking through historical highs in the short term is extremely low.
In summary, from a long-term perspective, we remain optimistic about Bitcoin's trend, firmly believing that its bull market has not yet ended; however, in the medium to short term, Bitcoin faces the pressure of a pullback. Everyone must manage their positions wisely to avoid being overly aggressive.
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