Will there be a black swan before and after the Bitcoin halving?

Just when BTC (Bitcoin) was about to rise, breaking through the resistance line of the upper edge of the wedge (about $70,000) and occupying the position above $72k, the bears suddenly came back and pushed the bulls back into the wedge below $70,000. The bulls' breakout failed. The bears' confidence is roughly based on the following points: first, the US tax season is approaching; second, the Fed's tightening policy; third, the sluggish inflow of ETFs and the expansion of outflows.

As for readers asking whether there will be a crash before and after the halving (guess if a 40% retracement is considered a crash?), in fact, pure on-site speculation may not be enough to produce such a large amplitude, while external black swan events are something you can only encounter but not seek (it sounds like they are really looking forward to a black swan!).

The above figure shows the waterfall chart of the retracement in the second halving, the third halving and the current halving. As can be seen from the figure, the 2021 bull market cycle we have just experienced is actually a more "painful" cycle than the previous and the later ones - if we link the retracement amplitude with the degree of "pain".

In the last halving cycle, we actually experienced two black swan "plunge" shocks, one was "312" in 2020 (with a retracement of more than 60%), and the other was "519" in 2021 (with a retracement of more than 50%)! How "lucky" we are!

Pullbacks are an expression of leveraged fragility. When selling causes prices to fall, falling prices cause leveraged positions to be liquidated. Leveraged positions are forced to be liquidated, causing more selling. More selling causes prices to collapse. This feedback loop, chain reaction, causes a price avalanche.

This round of halving cycle has been gentle so far, with the maximum retracement not exceeding 25%.

The common leverage ratios in the market are 2x, 3x, 5x, and 10x. To break them, you need to retrace more than 50%, 33%, 20%, and 10%, respectively. A retracement of 10% and a 10x leverage should be commonplace. A retracement of 20% and a 5x leverage should be done from time to time to lighten the burden. A retracement of 33% and a 3x leverage should be seen occasionally, like a sword of Damocles hanging high. A retracement of 50% and a 2x leverage is rare, and it has happened twice in a halving cycle in 2020, which can be considered "historic".

The phoenix was flying on the Phoenix Tower; when it left, the tower was empty and the river was flowing on.

The flowers and plants of the Wu Palace buried the secluded paths, and the clothes and hats of the Jin Dynasty became an ancient hill.

Looking back at the BTC spot volume and price chart since 2019 (as shown below), it is hard to overstate how much historical context there is.

It can be seen at a glance from the volume-price chart that trading volume will increase at the top of the bull market and the bottom of the bear market, and trading volume will decrease during the bull market recession and the bear market recovery period.

Price is a leading indicator of volume. Price moves first, and volume follows a little later.

At the beginning of the bull market, the price rose without limit. When the price rose to the point where most people began to react and rushed in to make a profit, the bull market basically reached its peak. So those who rushed in after realizing the situation took over at a high price and were then trapped.

The reason for the unlimited rise is that the sellers are reluctant to sell at low prices and do not release too many chips. Buyers have accumulated sufficient supplies and suddenly buy actively, without taking in too much, and the price goes up.

The price has reached its peak when the volume increases. It is not because people who see the trend rush in, but because the coin hoarders who are late to the party start to be awakened and take advantage of the high price to "reduce positions" and sell in large quantities.

When the bull market just ended, the price fell without limit. When the price fell to the point where most people cut their losses and left the market, the bear market basically bottomed out. Those who held on to the end finally couldn't hold on any longer. The slower they ran, the lower they cut their losses, and the more they lost.

The reason for the volumeless decline is that the buyers have already taken over at the top of the bull market, and have exhausted their purchasing power with overly high prices. They are out of ammunition and food, and are unable to stop the sellers from selling. The sellers only need to sell a little bit, which can drive the price down by a foot.

If the price drops and the volume increases, it means the bottom has been reached. Because when the price is at its lowest and the loss is the biggest, most people can no longer bear it and end up selling at a loss. However, their selling at this time has very limited lethality because the price is too low.

The rise and fall of each platform can be seen from the color stratification chart.

The largest area of ​​​​green tells us that B Station is obviously the one that benefits the most from the bull and bear market from 2021 to 2023. The disappearance of purple depicts the withdrawal and decline of H Station.

At the end of 2023, as the US iron fist hit the dominant B station hard, the previously tepid O station, Bb station and the US compliant C station began to expand their color areas, and one grew while the other declined.

Platforms may fail, but BTC will last forever.