Market Situation
In terms of the market, Bitcoin has once again fallen and tested the support level. Currently, the right-side support remains effective, and there is still demand at the bottom. Based on the bottom formed on February 3, it has been tested multiple times, and the supply is gradually depleted. The probability of a rebound in the future market is high, and the resistance level is still around 10w. The overall trend is still in a high-level range fluctuation and has not yet formed a trend. There is still a possibility of a new high in the future market, but the probability of a new upward trend is low.
Important Events Countdown This Week
Thursday 3 AM: FOMC Meeting Minutes - Focus on the "tariff" signal, which may contain clues about easing.
Friday 11 PM: Michigan Inflation Expectations - If it exceeds 4.3%, the market will cry; if it's below 4%, fireworks will be set off immediately.
What does FTX's compensation mean for the Altcoin market?
Previously, I thought that FTX's compensation would be delayed for years, like the Mt. Gox incident. But it turns out that the process is accelerating.
Starting from February 18, 2025, FTX will launch the first batch of compensation, with a total amount estimated between $7 billion and $8 billion, mainly in the form of stablecoins. I believe that a large part of this fund will flow into the market.
On February 4, FTX creditor Sunil posted the latest announcement on the X platform, stating that users will receive the compensation funds at 3 PM (UTC) on February 18. This compensation will bring about $1.2 billion in funds to the first batch of affected FTX users.
Alvin Kan, Chief Operating Officer of Bitget Wallet, said that the FTX repayment is seen as a positive signal for the recovery of the crypto industry, and he believes that a large part of the $1.2 billion repayment may be reinvested in cryptocurrencies, which could affect market liquidity and prices.
First, most FTX traders are high-risk investors, and their portfolios mainly hold Altcoins.
Secondly, current market data shows that most Altcoins (including ETH) are severely undervalued compared to BTC.
Reviewing the market conditions at the time of the FTX collapse, BTC was around $16,000, SOL was around $20, and ETH was around $2,500.
Now, with the influx of funds into the market, many investors will re-evaluate the current market environment and realize that the value of ETH is underestimated.
In addition to ETH, there are many Altcoins that have clearly lagged behind BTC in terms of gains from the cycle bottom.
Combined with the increasingly friendly crypto policy environment in the United States, I believe that a large part of this fund will flow into the Altcoin market, especially those tokens with real application value, rather than purely speculative Meme coins.
Why is the market constantly in a state of decline?
First, liquidity is indeed a major factor, and there is indeed a lot of money in the market, but why are people hesitant to enter the market?
I believe it is due to the breakdown of the narrative and the crisis of trust:
1. Insufficient overall market liquidity
2. Coupled with issues like tariffs and US inflation, some liquidity has flowed into safe-haven assets
3. Scarcer liquidity and macroeconomic sentiment have limited the proportion of risk liquidity
4. Reduced risk liquidity means that capital dares not go to high-risk, high-return markets
5. Crypto itself belongs to the high-risk investment field
6. The loss of risk liquidity has exposed the flaws of many projects and narratives (similar to the theory of who is naked when the tide goes out)
7. The lack of funding for narratives/Token projects, unstable prices, and a vicious cycle of doubts
8. Flaws exposed, narratives severely questioned and then broken, leading to a crisis of trust
You can also recall that the Altcoin market has presented a certain pattern since 2024 - most of them have been cut, trapped, and now the Altcoin market lacks a clear narrative and the external conditions for retail investors to dare to enter.
So, in addition to the macro risk liquidity being diverted, there is another more important factor - the continued fire in the primary market. From SOL to BSC, from the animal kingdom to celebrity coins, it has undoubtedly consumed the precious risk liquidity in the market again.
Too much risk liquidity has been consumed, and the remaining capital is more cautious liquidity, leading to the gloomy secondary market, and even a weakening of BTC buying volume, which may cause the critical support below to fail.
We have noticed that as the market has been sluggish, capital inflows have continued. We can understand this as Crypto believers depositing money into the market, and this part of the money is like the common people depositing money in the bank - they are unlikely to engage in high-risk investments.
Liquidity is the fundamental issue underlying the direction of the market, and the breakdown of the narrative and the crisis of trust are secondary issues!
Once these are resolved, the bull market will naturally come.
Trading is not about getting rich overnight, but about reasonable profits, being able to achieve long-term, stable, sustainable, and high-probability gains, so that you can continuously acquire wealth.
Creating value professionally, and details determine success or failure.
If you feel helpless or confused in the crypto market at the moment, I hope my sharing can provide you with some inspiration and help!
Group content:
Mainly spot trading, with macro market trend analysis and layout in advance, potential coin layout in advance, following the evolution of the cycle, and recommendations of Altcoins with opportunities.
We will choose more strong coins, trying to get a few targets for small bets on big wins. When the market is boiling again, we will definitely need coins with a strong wealth effect to ignite a new bull market. Grasping one can make a big profit, and grasping a few can make a fortune.
Reasonable control of position size, mainstream coins for the bottom, and Altcoins for appreciation.
