The bull market is not over, but it will take a long time to bottom out

In the past week, the crypto market has experienced the largest adjustment since Trump's victory. Although Bitcoin's decline is only 12%, the decline of many altcoins has been halved, and even the gains of some altcoins in this round of market have been completely wiped out. If the reason for not being pessimistic on December 10 is that the residual heat of the bull market is still there, then the recent decline has undoubtedly completely destroyed the confidence of the bulls. This has also made more and more investors believe that the bull market is over.

I have always emphasized that the general rise is difficult to sustain. The market value growth driven by emotions will eventually be backfired by the decline of emotions. Therefore, the faster the altcoin rises, the more tragic it will fall. After all, the market cannot always maintain a daily trading volume of $540 billion, which means that shocks and differentiation are inevitable. However, the author believes that the current shock is more like a bull market shift rather than the end of the bull market, and there are three main reasons: 1. As of December 22, long-term Bitcoin investors have sold 1 million coins since September, exceeding the 934,000 coins from March to June. However, the last time the sell-off reached this scale, Bitcoin had a maximum range drop of 33%, and now Bitcoin has only fallen 15% from its high. This shows that the market has stronger capacity to carry on in this cycle, and Bitcoin's resilience has also increased significantly. 2. Historically, whenever major favorable policies are introduced, Bitcoin often experiences a symbolic pullback, creating opportunities for institutions to enter the market. For example, after the approval of the Bitcoin ETF, Bitcoin fell from $48,950 to $38,550, a drop of 21%. The market's decline before Trump took office is also in line with this practice. Although the scale of the US Bitcoin ETF has surpassed gold, the allocation of pension funds, listed companies and traditional financial institutions to Bitcoin ETFs is still far lower than that of gold ETFs. Therefore, this decline is likely to become an opportunity for institutions to increase their Bitcoin positions.

3. MSTR currently has $7.65 billion of immediate additional issuance (ATM) quota and $15 billion of convertible note quota unused, with a potential available increase of up to $22.65 billion, and still has the ability to launch a defensive counterattack.

However, whether from the perspective of time or space, the market adjustment is far from over. If Bitcoin continues to test the lower limit of the range of $88,000, most altcoins may find it difficult to hold the low point of December 20. Even if Bitcoin completes the bottom near $88,000, the establishment of a new trend still needs a long bottoming process. In short, in this round of decline, investors do not need to rush to buy the bottom, and the market still needs more time to digest the negative factors.

At present, macro risks are still the biggest uncertainty in the market. Affected by the rebound in inflation and the imposition of tariffs, the market generally lowered the Fed's expectations for interest rate cuts next year, and even some Wall Street institutions have given predictions that interest rate hikes will begin in the second half of next year. As a result, the yield on the US 10-year Treasury bond continued to rise against the backdrop of the Fed's interest rate cuts, exceeding the federal funds rate for the first time in nearly two years. This has formed a significant crowding-out effect on the liquidity of risky assets.

At the same time, as US Treasury yields soared, non-US currencies faced huge depreciation pressure and capital outflow pressure intensified. This also promoted the rise in expectations for a yen rate hike. Although the Bank of Japan denied the possibility of a rate hike in the near future, Nomura expected the Bank of Japan to raise its benchmark interest rate in March 2025, and then raise the benchmark interest rate to 1% through two rate hikes. The risk of a reversal of the yen carry trade has once again become the focus of market attention.

However, the outbreak of macro risks is not a bad thing. According to the prediction of David Sacks, the White House encryption director, the crisis of the legal currency system is the opportunity for Bitcoin to become a mainstream currency.

In terms of operation, as Christmas approaches, market trading gradually becomes light. The phased land volume and land price may appear around Christmas. For investors who are ready to buy at the bottom, the leaders in the subdivided fields are still a good choice. After all, the decline of SUI, AAVE, LINK and other currencies in this round of adjustment is still far lower than the average level of altcoins, and the characteristics of the strong always being strong are obvious. ‍‍‍‍

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