The cryptocurrency market plunged again yesterday after Musk hinted at a bitcoin sale on Twitter. The first two plunges we gave timely advice on bottoming out, so is this drop still a chance to bottom out?
Since last week, there has been a subtle change in market funding: the liquidity in the market is very abundant, but the funds are flowing to low-risk and low-yield areas, which has led to a sharp drop in stable coin yields on DEFI and centralized exchanges. In my opinion, there are two possible reasons for the lower risk appetite of funds: first, out of short-term avoidance of regulation, on-farm funds choose to wait and see temporarily; second, investors are generally bearish on the future market, thus lowering their return expectations. If the lower risk appetite of funds is caused by the first reason, then the yield of stable coins will gradually rebound as the market stabilizes, and if it is caused by the second reason, then the excess USDT on the field will put further pressure on the price of USDT off the field. From the observation of the last week, the premium of USDT dropped from 0.43% to -083%, so we have reason to believe that funds have started to flow out.
In fact, the excess liquidity in the cryptocurrency market is just a microcosm of the flood of dollars. on May 28, the size of the Fed’s overnight reverse repo instrument usage reached its highest point since 2015 at $485.3 billion, surging for the eighth consecutive day. This shows that the U.S. commercial banking industry can no longer afford to accept more funds and can only deposit excess funds at the Fed through overnight reverse repo. At the same time, the Fed has been idling funds to the open market, which means that the current liquidity in the U.S. market has been significantly excess. on June 2, feeling the pressure, the Fed said in a statement that the Fed will soon cancel an economic stimulus measure for the period of the epidemic – by the end of the year will sell $137 billion of corporate bonds and exchange-traded funds, a move seen by the market as casting a stone for tapering. Once the Fed’s rate meeting on June 17 clearly cut the size of bond purchases target, then the global liquidity inflection point will also be approaching, when the outflow of funds from the encrypted market will be more obvious.
From past experience, once the risk appetite enters the downward cycle, the overall money-making effect of the market is often more dismal. For example, recently, the new coin, which represents the highest risk appetite in the market, has suffered a massive Waterloo, with almost all projects falling off a cliff at the opening, including many first-tier star projects such as ICP, CSPR and MINA. This phenomenon shows that the era when blind investment in the primary market could make money in the past is officially over, and at the same time the liquidity crisis of the new coin market has quietly come, and the local risks will frequently break out in the later market. If investors don’t have a strong skill in this field, they should learn to retreat sharply at the moment.
Many fear that Musk’s hinted sale of bitcoin is another smokescreen to induce short-selling. In fact, Tesla does have a motive to liquidate bitcoin. That’s because operationally, Tesla’s share of global new energy vehicles has fallen from 29% in March to 11% in April, which is worse than the company’s numbers in January 2019 when it had an operating crisis that caused Tesla’s stock price to plummet more than 30% from its highs. With its main business continuing to fall into the red, selling bitcoin is the best option for Tesla to maintain better earnings numbers. What’s more, the price of bitcoin is already less than 30% of the profit margin from Tesla’s buying cost, which will undoubtedly add insult to injury for Tesla, whose cash flow has been very tight, once the hedge appears. But in any case, I believe that, as a worldwide currency, the rise and fall of bitcoin should be determined by the real supply and demand in the market, not the good or bad of a certain institution or individual, so a complete decoupling from Musk is another opportunity to test the value of bitcoin.
In operation, I believe that the outflow of funds is not a one-off, but a slow and repeated process, the short-term impact on the market and obvious. So the coming week, I think the pattern of oscillation will not change, swing operation is still the best coping strategy at the moment. The operation idea is summed up in eight words: big fall dare to buy, big rise will throw. In short, the accumulation of less into more, slow is also fast.
Currency market trader
BTC: The pattern of short-term oscillation remains unchanged, and both sides continue to fight back and forth around 35000. Operationally, deviations from 35000 can be appropriate for low suction, and above 38000 is gradually high selling. From a weekly perspective, bitcoin continued to attack the 30 antenna this week without success, if next week still can not stand on the 30 antenna, then bitcoin in late June still have the risk of the next step.
ETH: Oscillating disc rising trend, short-term adjustment still has a chance to touch 2900, but the pressure in the 2900-3000 area is greater, it is recommended to gradually over 2900 high selling.
DOGE: after landing Coinbsae good release, once rose close to 40%, but the volume can not keep up with the price of the coin is destined to move only a day trip market, it is recommended to get out.
LTC: Linkage bitcoin, weak oscillation is the main.
XRP: the high point of this round of rebound is basically fixed at 1.1, it is recommended to get out.
EOS: Weak oscillation, not recommended to participate.
FIL: This rise is an oversold rebound against the former high of 238, the current low to high has nearly doubled, the rebound is basically in place, suggest getting out.
DOT: Under the positive stimulus of KSM parallel chain auction, the disk was once fast and strong, but the coins in the following position tend to have limited space, so it is not recommended to participate.
LINK: Oscillating weakness, high dumping.
UNI: Oscillating disc rising trend, 30 a band of greater pressure, can not break through can be out.
Posted by:CoinYuppie，Reprinted with attribution to:https://coinyuppie.com/the-bulls-blood-is-drying-up-and-there-are-few-opportunities-to-bottom-out/
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