At the macro level, the Federal Reserve's dovish tone continues to spread. According to CME's "FedWatch" data, the probability of a 25 basis point rate cut at the Fed's October meeting has reached 99%, and the market is even betting on the possibility of further rate cuts in December. The probability of a cumulative 75 basis point rate cut has reached 6%. In other words, the market has almost accepted a 25 basis point rate cut as a fait accompli, and on this basis, it cannot be considered a positive sign for this month's rate meeting.
At the same time, new signals are emerging from the US political arena. Former New York Governor Andrew Cuomo plans to create a "New York AI Innovation City" and establish a special committee to promote the coordinated development of cryptocurrency, artificial intelligence, and life sciences. To discerning observers, this is a classic pre-election tech play: politics voting for tech's stance, while tech, in turn, serves the votes, driving up the crypto market. This is not true.
From the perspective of the crypto market, capital has indeed begun to flow back. According to Cointelegraph, citing data from Artemis, the Ethereum network saw a net inflow of over $900 million in stablecoins over the past 24 hours. Meanwhile, institutional investors have continued to increase their holdings of ETH following this sharp drop. As of now, institutional treasuries and Ethereum spot ETFs hold over 12.8 million Ethereum tokens, representing over 10% of the total supply. The only regrettable aspect is that the return of funds has not been accompanied by a proportional increase in trading volume.
According to data, Bitcoin spot ETFs experienced a net outflow of $1.23 billion last week, the second-highest on record, while Ethereum spot ETFs saw a net outflow of $312 million. Regardless, current off-market sentiment suggests that despite the significant market volatility caused by the deleveraging events in early October, overall investor optimism about the crypto market remains. However, this optimism is more of a matter of inertia than conviction, stemming from a universal shift in the crypto market following the continued influx of macro funds.
Regarding the market, following the sharp drop at the beginning of the month, the market is in a rebound and correction phase. As previously mentioned, the market is expected to undergo a second test after the oversold rebound. This second test will likely see the market fall below the previously anticipated bottom, reaching a low of 103,500 before rebounding strongly again. In the short term, bearish sentiment appears to be weakening again, and the market needs to continue its recovery. If I must make a long or short call at this mid- to long-term level, I personally still favor another wave of higher prices.
Overall, this rebound maintains the view of a technical correction, which will subsequently lead to the start of a new upward cycle. Building bullish confidence after a significant drop requires more time and more variables. Regardless of the Fed's monetary easing cycle, the bull market logic in risk markets remains intact, but the pace is certainly entering its final stages.
Many friends have recently asked me if this bull market is over. Since October 11th, my personal circle and market structure have undergone significant changes. During this time, I have been working with some of my friends on both professional and psychological development. Regarding the topic of bull and bear markets, we have long held the view that market fluctuations have little to do with individual assets. The only connection between bull and bear markets and most retail investors is the speed of profit and loss.
Looking back on the current cycle, Bitcoin has been bullish for three years. Have you made money? Maintaining a 50% asset balance in major cryptocurrencies will ensure that we have the capital to rebound in the long term, no matter how extreme the market conditions, crashes, or losses occur. The definition of bull and bear markets in the risk market is directly related to the Federal Reserve's economic policies. Anything else is smokescreen, or simply because your holdings haven't appreciated.
Back to the market:
Bitcoin: After breaking through the aforementioned focus range, it's approaching the low of the previous spike. After halting the decline, the market rebounded again in a short-term cycle and is currently consolidating around 111,000 points. Technically, there's no trend reference at this level. After breaking through the strong resistance level of 116,000 points, we'll look towards 120,000 points. If it falls below 106,000 points, the market will test the bottom three times. In the short term, this range of volatility is a sign of weakness in both bulls and bears. However, looking at the longer-term timeframe, the weekly chart closed above trend support this morning, and the strong support level on the daily chart hasn't been effectively broken. This major support level clearly provided strong support for this decline. Wait for the market to adjust. In the absence of new negative news, this volatile rebound is likely to continue until early next month.
Ethereum: In the short term, watch for a test of resistance at 4200 points. A breakout would give Bitcoin a chance to lead the way higher. Altcoins will face a more challenging short-term outlook than Bitcoin and Ethereum. Over the past few days, there has been a small, coordinated rise, with little sign of a reversal. Privacy continues to be a hot topic, with ZEC and ZEN nearly recovering their losses and showing signs of continued growth. The meme sector has also shown signs of recovery recently, but individual investors are still advised not to over-invest. For a more conservative approach, consider the Perp DEX platform coin series. As a supplement to mainstream coins, they hold some promise for the second half of the cycle.
The Fear and Greed Index reached 30 today. #CryptoMarketRebound $ZEN
