Is the bull market over? These indicators are worthy of attention

In the article on June 18, a reader left a message as follows:

"Hello Brother Dao, it seems that at present:

1. K line: Bitcoin fell below the 120-day moving average and the 200-day moving average, and the highs and lows of Bitcoin's rebound were getting lower and lower.

2. The price of mining machines has fallen, and the new currency has broken on the line.

3. On-chain data: short-term hodl selling below 155 days, long-term accumulation of more than 155 days.

4. If you refer to the data in 2013 and 2017, you must have more than two consecutive monthly positives to judge the possibility of bullishness, but whether there is still time.

5. The U.S. stock market has also deviated too much from the mean, and there is a possibility of a correction at any time.

I would like to ask, why do you judge that there is still a bull market, thank you. "

This passage lists a total of 5 points for judging the market trend. Taking these 5 points as an example, I will share my understanding with you:

Among them, points 1 and 4 are judged from the perspective of technical analysis. I'm not very good at using technical analysis to judge market trends, so I can't give a good answer to these two points.

The third point is the data on the chain. I think we need to continue to look at this point, and just looking at the data on a certain chain cannot fully explain the problem. I will also refer to other data comprehensively, such as the market value of Bitcoin, Jiang Zhuoer 60 Daily cumulative increase, etc. Based on various on-chain data, there is still a big gap between the current market conditions and the peaks of previous bull markets. So this doesn't really explain bulls and bears.

The second point is about the decline of mining machines and the breaking of the new coins online. I think this is due to the impact of the current environment.

During this period of time, the whole world is paying attention to our country's crackdown on the mining industry. Especially in the past two days, the shutdown of Sichuan across the board has dealt a huge blow to my country's mining industry and Bitcoin computing power, and overseas media have been intensively reporting on it.

However, overseas sentiments interpret this more positively. They basically believe that knocking out China's computing power will allow Bitcoin to further decentralize, which is good for Bitcoin in the long run. In addition, many overseas countries have extended an olive branch to Chinese miners. , my country's miners are doomed to deploy overseas on a large scale. So this matter is not good for the market in the short term, but not necessarily in the long term.

Regarding the release of new coins, my understanding is that most of the new coins here are DeFi tokens. As I shared in my previous article, I think it is difficult for DeFi to break out again, so it is relatively normal for new projects launched in the current sluggish market to break out.

Therefore, the price of the mining machine in the second point fell, and the new currency broke on the line.

On the whole, I tend to think that it is a short-term factor, and it is not likely to last.

Regarding point 5, the U.S. stock market has also deviated too much from the mean, and there is a possibility of a pullback at any time. In fact, I mentioned in my 2019 article that I think the bubble in the US stock market is too big, and the outbreak of the epidemic in 2020 will directly pull the US stock market down to its peak in the form of multiple circuit breakers.

In my opinion, this is a sign that US stocks have begun to bear. However, the Federal Reserve released water recklessly, artificially distorting the market trend, and continued to blow the US stock bubble for a year.

This is not the first time the Fed has done something like this. The 10-year bull market in U.S. stocks since 2008 was also caused by the Federal Reserve’s release.

Therefore, when judging bulls and bears, I pay special attention to the macro factors of the market: especially the Fed's financial policy, that is, the federal funds rate.

As we shared earlier, judging from the current policy, it is very unlikely that the Fed will tighten its policy this year or even early next year.

A friend mentioned that the Federal Reserve has secretly raised the interest rate on excess reserves and the overnight reverse repurchase rate, but in my opinion these are marginal and auxiliary measures rather than fundamental tightening.

So as long as the fundamental interest rate, the federal funds rate, is not raised, the overall environment will remain loose. In this case, where will the released water go?

It is impossible to stay in the bank. I think it will still go to the financial market, including the digital currency market, because capital is always greedy.

In addition, judging from the current economic situation in the United States, the U.S. economy is still recovering, with unsatisfactory data in all aspects, and the employment rate is still sluggish. The U.S. stock market is still the only bright spot in the economy and an important asset for ordinary people.

In this case, we can even make a bold assumption, what will happen to the United States if the U.S. stock market really plummets next? I think not only the economy will suffer major problems, but society may also fall into turmoil. And once this happens, the U.S. government will never stand idly by and will still step in to intervene. How to intervene? I'm afraid I can only release water, and use more force to release water.

In addition, if the U.S. stock market really plummets, where will the water from the U.S. stock market go? I think the digital currency market is also indispensable.

No interest rate hikes are worrying, and raising interest rates makes the market even more panicked. So the current Federal Reserve is being roasted on the fire, in a dilemma.

At the back of the article on June 18th, another reader left a message saying: "The probability of raising interest rates in the United States is getting smaller and smaller, and the United States has lost the ability to raise interest rates, because once the interest rate is raised, the Will implode."

I tend to agree with this point of view. This is not to say that it is impossible for the Fed to raise interest rates, but that there will be many obstacles to raising interest rates, and it will take a lot of courage.

Everyone knows that this is a game of drinking poison to quench thirst, but there seems to be no other way except to release water. The Fed's current idea is to hope that the U.S. economy can rebound as soon as possible, so that the market can bear the consequences of raising interest rates, so as to end this release as soon as possible. But judging from the current data, I am afraid it is not optimistic.

As for the market rumors that there may be two rate hikes in 2023, let's take a closer look at this time point: 2023, the year before the next presidential election in 2024. Raising interest rates at this point in time, once it triggers a market plunge and social unrest, will it have any impact on the re-election of the current president? Whether the current president will do everything possible to put pressure on the Fed is worthy of attention and consideration.

Let's not forget that Trump desperately said that the Fed should raise interest rates before taking office, but after taking office, he desperately put pressure on the Fed not to raise interest rates, and even publicly commented on the Fed's policies. In a way it gave in. I think not only Trump will do this, but every president wants to do this in his heart, and they all hope that the Fed's policies will benefit themselves, and the policy that benefits them is to maintain accommodative policies.

I even think that the Federal Reserve is trying to curb the madness of the market by making such statements on purpose. If the words really do not work, they may use some marginal measures to contain them. However, it may be very difficult to really move the federal funds rate.

Since it is a game of drinking poison to quench thirst, it cannot go on forever. It must end one day. When it will end and how it will end, I think only God knows, because no one has played this game in history. Historical data are available for reference.

So for the judgment of the second half of this bull market, I am focusing on a key factor: when the Fed will actually raise interest rates, it will be a rate hike that will be put into action, not a rate hike based on empty words.

Once the interest rate is really raised, the biggest off-market negative in the digital currency market will come.