Source: Currency Trader

After continuously hitting price ATH, Bitcoin ushered in a clear profit divergence point in this bull market in November: On the one hand, Wall Street vest MSTR frantically scanned goods and accumulated purchases On the other hand, long-term investors who held the currency for more than 6 months continued to sell Bitcoin at a rate of 25,600 coins per day. The last time the long-short divergence point appeared, Bitcoin entered a five-month period of shock, and the currency price also fell back from a maximum of $73,700 to $49,000. Therefore, the reduction of long-term investors' holdings has also triggered market concerns about adjustments.

It is worth noting that the selling by long-term investors since September is significantly different from March to May. First of all, those who left the market in September were mainly investors who had held the currency for 6 months to 1 year, and selling accounted for 35%; while those who left the market from March to May were mainly investors who had held the currency for 1 to 3 years, and selling accounted for 35%. The ratio is 53%. The former more reflects the realization of swing profits (the market has risen too fast), while the latter is like the wavering of believers. Therefore, the washing cycle of the former will be significantly shorter than that of the latter. Secondly, the scale of reduction since September is 507,000 Bitcoins, which is much lower than the 934,000 Bitcoins from March to May. The weakening of the kinetic energy of the crash means that the amplitude of the shock will also be reduced. In other words, although periodic adjustments in Bitcoin are inevitable, compared with the previous round of adjustments, the new round of adjustments will be more moderate.

If you want to predict the price range and cycle of adjustment, the author believes that Bitcoin is most likely to fluctuate in the range of 88,000 to 105,000 in the next six weeks. The lower limit of US$88,000 is based on the average price of US$88,627 for the first large increase in MSTR’s holdings after it released a US$42 billion investment plan; the upper limit is based on the pricing of Bailite Bitcoin ETF options: Institutions generally expect Bitcoin to increase by January 17 ( It is unlikely to break above $105,000 before Trump takes office.

During the Bitcoin turmoil, market funds began to turn their breakthrough points to altcoins. In the past week, the market share of altcoins increased from 8.91% to 11.0%, and the daily trading share also increased from 23% to 37%.

CoinMarketCap data shows that from August 5 to December 1, the median increase of the top 100 currencies by market capitalization was 106%. Although most altcoins have doubled in value, most holdouts remain indifferent. The reason is that the current valuation of most currencies is still lower than the 80% of the historical quantile, and the price is still below the 90% of the historical quantile. Therefore, the main force did not encounter much resistance in completing the first stage of the rise. For example, the time-sharing charts of altcoins such as DOT and SAND often show exaggerated "peak sprints", which shows that funds have a strong willingness to actively buy, but the market selling liquidity is not sufficient. This is also the reason why the author repeatedly emphasizes the need to change the bear market thinking of altcoins in the past.

Different from choosing new coins with small market capitalization to break out in the past, this round of mountainThe leaders of the altcoin market are large market capitalization currencies such as XRP, DOGE, and ADA. This situation has only appeared in the bull market of 2020-2021. If funds dare to invest on a large scale and deploy altcoins in an all-round way, they must have grasped the changes in market trends in advance. This also shows that after Trump wins the election, the potential positive benefits of the encryption market may far exceed market expectations.

Although old altcoins with large market capitalization have demonstrated strong money-making effects, these coins can easily increase their circulating market value by hundreds or even hundreds of billions of dollars every time they double, which also means that their ceiling is not high after all. . Therefore, the pullback of old altcoins plays more of a role in raising the overall valuation level of altcoins and igniting market sentiment. The projects that can truly obtain high valuation premiums in every bull market are often closely related to the narrative logic of growth.

With the market being very disgusted with new coins with high FDV, there is a high probability that sub-new altcoins issued in 2020-2021 will become a new breakthrough point for funds. The main reasons are as follows:

1. The baptism of a complete bear market cycle: All these currencies have experienced a complete bear market cycle, and the valuation de-bubbles have been relatively sufficient. At the same time, the circulation rate of most currencies is above 80%, and most of the VC shares have been unlocked within three years, so the market is relatively clean.

2. Capital precipitation effect: Historically, every round of large-scale capital investment usually produces a precipitation effect. For example, after the Internet bubble burst in 2000, the industry experienced a three-year bear market, but in the end 12% of companies resurrected and entered a long-term bull market. 2020 to 2021 is the peak of the encryption investment mileage cup level, but currently only the SOL project has completed its transformation, which is far from enough. In addition, the second bull market did not come with the arrival of a technological revolution. Many new projects still followed the route of technological improvement, which means that projects in the previous cycle still have first-mover advantages.

Historically, the most striking feature of the first stage of the altcoin market is the indiscriminate sweep of goods and the elimination of low prices. Subsequently, the market will enter a full reshuffle stage, and currencies with good fundamentals will receive air refueling in the second stage. In terms of target selection, the author still recommends configuring Lao Tianwang and DeFi leader.