Jiang Zhuoer: The downward trend of cryptocurrencies is likely to have ended

1. Why is there a downward/upward trend?

The main reason for the trend is the group emotions of people. People have the herd effect. The emotions (greed or fear) of a group of people communicating with each other will be contagious and amplified. They will gather together to form a snowball with huge potential energy and roll forward.

In addition, overbought/oversold often occur during the decline/rise. For example, during the sideways phase of the bear market in 2015, the price of the currency fluctuated around the central axis of 1,500 yuan for a year, but in the last decline in January 2015, due to group panic, the price of the currency bottomed out to 900 yuan, far below the reasonable price of 1,500 yuan in the bear market.

2. Trends and news effects

In a downward trend, due to the huge potential energy of the snowball, the negative effect is enhanced and the positive effect is weakened. Unless the positive news is extremely good, it will not be able to resist the downward trend. On the contrary, negative news, regardless of the true or false source, even a simple screenshot, will lead to a wave of decline.

However, the cathode generates yang, and the anode generates yin. Any trend will exhaust its potential energy. When can we consider the trend to have ended (or even reversed)? It depends on when the news has a counter-effect, which means that the trend has gone too far.

On November 27, 342,000 ETH (worth nearly 50 million US dollars) was stolen from the upbit exchange, which is a typical example.

First of all, this is a sudden and real negative news. No exchange will deliberately make such fake news. Every theft means that a large number of users will leave permanently (due to fear of losses in the exchange). Therefore, unless they can't hide it, the exchange will find a way to bear it themselves after the theft.

Then after this real negative news occurred, the price of the currency fell normally by $200, but abnormally soared by $500. This is a typical example of the news having a counterproductive effect.

A piece of bad news has a counter-effect on the downtrend and gives a clear signal that the trend may have gone too far and is in an oversold position.

3. Observe trend changes from sentiment changes

I have recently conducted three consecutive market sentiment surveys, all after a V-shaped reversal:

K line is 30 minutes line

Convert to proportion

It can be seen that more and more people (from short sellers and spectators) are transforming into long sellers (which shows from a micro perspective that the trend is changing), but it has only reached 31% (so it has not risen yet), which confirms the performance that bad news has led to an increase, indicating that the downward trend may have ended.

4. Re-emphasize

1. Any short-term prediction has only a 50% accuracy rate. The longer the term, the higher the accuracy rate. The daily level can reach 60%, and the annual level needs to reach 90%. For example: the halving bull market will begin next year.

2. In the cryptocurrency market with huge volatility, you must not play with leveraged futures, let alone leveraged futures based on other people's predictions. Even if you are right 1,000 times, as long as you make a mistake once, you will end up with zero. The positive and negative premiums/pins of futures further amplify the probability of making mistakes. As long as the lowest point pin touches it, you are finished.

3. Why do we emphasize spot trading? Because it is impossible not to make mistakes in the market. If you make a mistake in spot trading, just play dead. If you really need to add leverage, over-the-counter (borrowing money) leverage is much safer than on-site leverage. The reason we buy Bitcoin is that we are bearish on inflation-prone fiat currency in the long term, which is consistent with the logic of buying scarce assets such as houses. The fiat currency/central bank system has serious problems now, so that strange regulatory measures such as negative interest rates have emerged.

4. The bull market after halving is not only because of the halving, but because the Bitcoin cycle has reached the bull market stage, and the two have formed a resonance.

Take the spot, withdraw the currency to your own wallet, and prepare for the arrival of the halving bull market:)