Source: Talk Li Talk Outside
Yesterday (Beijing time, February 3) was the beginning of spring, and there is a traditional custom in the folk called "avoiding the Tai Sui in spring". Avoiding the spring means that the energy field is believed to change at the beginning of spring, which may have an adverse effect on people. 2025 is the year of the Wooden Snake, and according to folk beliefs, people with the zodiac signs of Snake, Pig, Monkey, and Tiger are believed to offend the Tai Sui, so they need to avoid the spring.
How to avoid the spring? You can find a quiet or closed place, let yourself avoid the interference of the outside world, maintain a peaceful state of mind, and avoid emotional fluctuations.
However, it seems that many people did not avoid it yesterday, because the Altcoin market experienced another massive crash comparable to 312, with BTC dropping to around $91,500, a drop of about 6%. ETH was even more dramatic, with a single-day drop of over 25%. As for other Altcoins, it would not be an exaggeration to describe it as a bloodbath.
According to the latest on-chain data, in the past 24 hours, a total of 719,347 people were liquidated, with a total liquidation amount of $2.289 billion, of which $1.819 billion were long positions and $470 million were short positions. As shown in the figure below.
This morning, I was still writing an article with my head covered, but a few hours later, I came back to find that it had already crashed... Unfortunately, I missed the scenery at the 2100 level of ETH.
Remember March 12, 2020, when there was also a massive crash, with BTC dropping from around $7,900 to around $3,800, a drop of about 52%. ETH dropped from around $200 to around $86, a drop of about 57%. (The data may vary slightly across different statistical platforms, and you can check the historical data yourself.)
However, this 203 crash is different from the 312 crash. Firstly, BTC's performance is relatively more resilient, and secondly, ETH's drop is more severe compared to BTC. Although I have always been more optimistic about the long-term development of ETH, and have discussed the topic of Ethereum in my recent articles, ETH in this cycle seems to be not playing by the rules, and it has never disappointed in terms of disappointment. Because I have written a lot about Ethereum recently, I have indeed been scolded by the background messages, and today I have blocked several "little darlings" who came to scold me. Well, I will try to restrain myself in the next few days and mention Ethereum less, so as not to continue to incur the wrath of the masses.
As I write this, I suddenly remember the words hanging on the wall of the office of my former employer: "Find hope in despair, and life will eventually be brilliant." This sentence seems to be able to express my personal expectations for ETH.
1. What might the market do next?
In fact, I really like this kind of waterfall opportunity. In the previous article (February 3), I even shared my plan for this cycle, in which I had a 10% C-level position that I hadn't touched, just for situations like 312 and 519. However, the 203 waterfall doesn't seem to be shocking enough, and since I was in seclusion writing an article that morning, I didn't make any supplementary trading operations.
As for crashes like 312, 519, and 203, we don't need to deliberately find the reasons, because looking for reasons after the fact is of no use to our positions. As I said in the previous article: I deeply sympathize with those who were liquidated, but for the market, more liquidations are healthier.
If you have experienced the previous 312, or you can directly look at the K-line, you can see that each time there is such an extreme situation, it will be accompanied by a huge amount of liquidation, and after the liquidation, after a period of adjustment, there will often be a unilateral upward trend or even a new ATH breakthrough. (Historical performance does not represent the present, nor can it directly predict future performance, DYOR)
You dare to "All In" on BTC at $100,000, ETH at $4,000, and the meme coins that could go to zero at any time... Now what? You're afraid of the once-in-a-few-years big waterfall opportunity?
Of course, maybe some people haven't been afraid, but it's just that they were too bold before, always liking to randomly "All In" with tears in their eyes, which has led to their current inability to move.
As of the time of writing this article, the market has also started to rebound, although ETH has not yet reached $2,800, but BTC has returned to above $100,000. Yesterday, I also saw a member in the group share an interesting comparison, which shows that ETH really hasn't disappointed in terms of disappointment. As shown in the figure below.
However, the rebound is the rebound, and you shouldn't just go long again after seeing the rebound. In this volatile market, going long or short can easily "kill" yourself. If you still have a position, you can take the opportunity of the 203-level waterfall to pick up some cheap spot positions. If you don't have a position, then you can re-think and plan your position management.
As for the possible market trend going forward, I'll directly quote the views of some members in the group (omitting names/nicknames to protect their privacy):
A) The weekly "bearish engulfing" and the combination of MACD suggest that it may continue to correct. In addition, the 3-day "bearish engulfing" is also not optimistic, and the uptrend line has been broken, so let's wait and see. As shown in the figure below.
B) There will be another wave from the 8th to the 18th, and be careful on the 4th.
C) Looking solely at the changes in the fundamentals, the US tariff policy is the direct cause, but the background is the reduction of interest rate cut expectations, that is, the fundamentals changed on December 20 when the interest rate cut expectations were reduced, and such negative news will be amplified infinitely. Combined with the "fierce tiger descending the mountain" and the monthly line Pinbar technical analysis at that time, as well as the impact of AI bursting the US stock bubble on Cryptocurrencies, which we also mentioned in the group a few days ago, this is also one of the main reasons why this round of AI has fallen the most.
Of course, other members have also expressed their personal views. In short, the market is volatile, and people's minds are also volatile. Some continue to be pessimistic, and some continue to be optimistic, but whether to participate in buying/selling, what to buy/sell specifically, and how to buy/sell reasonably... The decision on these issues is actually up to you.
I'm not good at giving trading guidance, and I don't want to do that either. I can't provide too many clear buy/sell recommendations for others. At most, I mainly use the "Talk Li Talk Outside" bridge to remind everyone to do a good job in position management and risk management, and provide some personal experiences, views or ideas related to the Cryptocurrency market, that's all.
The market has now reached a new crossroads, some will choose to get off the bus, some have already been thrown off the bus, and some will take the opportunity to get on the bus. Which one are you?
As for me, I will continue to maintain a relatively optimistic attitude. I won't be thrown off the bus (but I have actually gotten off the bus in batches since last December, which I mentioned in the article on February 3). I will still stick to the view I expressed in the previous article: We have not yet entered a bear market, and this bull market has not completely ended yet. At least I haven't seen a $100,000 BTC bear market (maybe I'll see it in 5 years). But the risk will be greater as time goes on, and the time left for this bull market is getting less and less. Based on your own position and risk preference, you can continue to maintain your existing strategy and pace.
Here is the English translation:The best operation in this bull market stage is to sell in batches. It is more difficult to maintain wealth than to create wealth in a bull market. Especially for newcomers, do not use leverage casually, do not play contracts casually, and do not go 'All In' to buy the dips, as these may cause your assets to be zeroed out or trapped at the top.
The core logic or gameplay of the market is to make as many people lose money as possible. Therefore, we will see all kinds of so-called news factors, the more institutions and people participate, the more complex the market cycle will become, which is why the bull market in 2017 was relatively easier to make money than the bull market in 2021, and the bull market in 2021 was relatively easier to make money than the current bull market.
Especially in the current environment of weak consumption, most people (mainly retail investors) no longer have or will not put so much capital into investments, especially in the high-risk field of investments. Life is already difficult, let alone doing investments.
2. Let's also talk about the US tariff issue that everyone has been focusing on these days
In fact, the US tariff policy is not just a day or two. Trump had said before taking office that he would increase tariffs, and this expectation has always been there. It's just that the tariff policy these two days has given the market a relatively sufficient reason for the decline. The market needs to clear leverage, but the decline still needs to find a reason, and the implementation of tariffs is a good reason.
But can the impact of tariffs on the economy (the US economy) be immediate?
This is actually a matter of finding a balance between short-term pain and long-term gain. Yes, tariffs can promote domestic production in the US, but the final transmission effect may take years, and it's not that as soon as the tariff policy is implemented today, it will be difficult for foreign goods to enter, and domestic companies can immediately start producing all kinds of needed items.
From a short-term perspective, the tariff policy will indeed directly lead to a strengthening of the DXY (US dollar index) and a decline in various risk assets (stock market, crypto market), because from a long-term perspective, tariffs may re-ignite the risk of inflation, causing enterprises and consumers to face the blow of rising costs and narrowing profits, and many funds need to choose to take a defensive layout.
As for how much impact this short-term and long-term perspective can have, this may depend more on the trade volume between the US and other countries (such as Canada, Mexico and China). If the trade volume between the two sides is large, the impact, or the impact on the global economy, will certainly be huge, which will certainly disrupt the liquidity of the market to a greater extent.
3. Crashes are not terrible, what's terrible is that your position is gone
For retail investors (especially those who have experienced 2-3 bull and bear cycles), what is a 20% crash? We have experienced the 94% crash in 2017 (Bitcoin fell more than 40% in a few days), the 312% crash in 2020 (Bitcoin fell more than 50%), and the 519% crash in 2021 (Bitcoin fell more than 30%).
Crashes like the 20% one yesterday actually happened once last year. On August 5, 2024, the price of BTC dropped from $58,200 to the $49,500 support level in a single day, with a daily decline even greater than yesterday's. I wonder how many people still remember the situation at that time.
Crashes are not terrible, what's terrible is that your position is gone. Only after crashes, only after the long positions are liquidated, can the market go through adjustments and continue to move forward. At the same time, don't forget the catalysts we've outlined in previous articles, including:
- More Altcoin ETFs are still likely to be approved this year
- The US crypto strategic reserve plan is still expected
- More countries are also exploring the issue of crypto reserves
- Large institutions are still deeply involved and deploying in the crypto field
- etc...
I'd also like to mention the thing about El Salvador the other day. Don't be misled by some self-media who like to exaggerate, saying that El Salvador caused the market crash. They were still buying BTC on February 1st and announced the cancellation of BTC's legal tender status on February 2nd. To be honest, if someone promised me a huge loan on the condition that I acknowledge that the US belongs to China, I would definitely acknowledge it without hesitation, as getting the money is more important than anything else.
In short, don't let panic emotions occupy your position, keep your own strategy and rhythm plan, and continue to maintain focus and thinking. When the market is prosperous, see the bubble; when excited, think about the crisis; and when everyone is panicking, take a position that you can bear the risk and bravely seize the opportunity.
