Risk sentiment improves, Bitcoin returns to the 20,000 mark

Affected by the improvement of market risk sentiment, the rebound of U.S. stocks and the decline of the U.S. dollar, Bitcoin got rid of the narrow range since September and returned to the 20,000 mark. However, the entire cryptocurrency market still lacks good prospects, and the outlook may be difficult to improve.

Stocks rebound and dollar falls

At present, the market is tracking the interest rate hikes of the Federal Reserve and major central banks, and the liquidity of the US dollar is still the most critical factor leading the trend of the cryptocurrency market.

Investors have already digested the expectation that the Fed will raise interest rates by 75 basis points next week. Affected by the words of Fed officials to slow down interest rate hikes, the market expects to slow down interest rate hikes after December, and stock market bulls are actively betting, forming a recent strong rebound in European and American stock markets. Cryptocurrencies are benefiting from improved sentiment in U.S. stocks and a drop in the U.S. dollar, with Bitcoin shrugging off its low volatility since September and returning to the 20,000 mark.

The rebound in market sentiment was also affected by the UK political situation and US stock earnings reports. Rishi Sunak, who has a financial background, was elected as the prime minister, and investors have high hopes for it, and are willing to believe that it can correct the declining economy of the United Kingdom; at the same time, the US stock market earnings report that is being disclosed will also have an impact on short-term market trends. If the two factors constitute a positive feedback, it is expected to expand the current scale of the rebound, otherwise the gains will be pared back.

The cryptocurrency market itself lacks positives

The cryptocurrency market is still in a bear market, as investors acknowledge. First, the lack of effective supervision has discouraged big capital. The US and European sanctions against Russia may accelerate this process, but it will take time; second, the collapse of stablecoins has suppressed market confidence and liquidity, and the collapse of LUNA shows the market mechanism It takes a long way to build new credit, the bear market gives participants enough time to think, and it takes time for participants to recover their confidence;

In the end, the ecosystem of the currency circle was destroyed. Affected by the continuous decline of cryptocurrencies, exchanges, funds, and cornerstone investors suffered substantial losses, triggering liquidations and withdrawals, which severely hit the currency circle ecological chain. This is a systemic risk.

Of course, some investors firmly believe in the bright future of cryptocurrencies. Right or wrong does not matter. What matters is the timing of participation. Timing is everything. At present, the market is sluggish, whether it is worth taking a shot, how to do it, and what should I do if the situation is not conducive to me... This is a question that should be considered, not a matter of temperament.

Cryptocurrency investors may need to brace for a protracted war ahead of an inflection point in macro fundamentals and the Federal Reserve’s monetary policy.

Outlook

Although Bitcoin rebounded significantly overnight, the overall trend remains weak at 20,000. If it can break through 22,000, it is expected to rise to 25,000. Breaking through 25,000 may change the short-term trend, otherwise the trend will continue to be under pressure; the key support below is still there 18000-17500, falling below 17500 will open a new downside, looking at 15000-13000.