The "Fake Breakout" Trap: A Nightmare for Contract Traders, or an Opportunity for Investors?

The "Fake Breakout" Trap: A Nightmare for Contract Traders, or an Opportunity for Investors?IntroductionThe digital currency market is full of various investment opportunities, but also harbors many risks. Contract trading, due to its high leverage feature, has become a "nightmare" for many players

The "Fake Breakout" Trap: A Nightmare for Contract Traders, or an Opportunity for Investors?

Introduction

The digital currency market is full of various investment opportunities, but also harbors many risks. Contract trading, due to its high leverage feature, has become a "nightmare" for many players. The recent emergence of "fake breakouts" in the market has further amplified this risk, trapping numerous players and causing their account balances to shrink steadily. What are the reasons behind this phenomenon? How should contract traders respond? This article will delve into the "fake breakout" phenomenon perpetrated by cryptocurrency "market manipulators" and analyze the logic and risks behind it. We will also look ahead to the trends in the future market, providing investors with some reference points.

The "Fake Breakout" Scheme: How Do Market Manipulators Harvest Contract Traders?

The recent BTC price trend has been like a rollercoaster, fluctuating wildly. Yesterday, BTC fluctuated around 58,500 before surging quickly to above 59,600, attracting many bullish traders to enter the market. However, after the US stock market opened, market manipulators swiftly crashed the price to 58,000, attracting some short-selling players. The previous bullish players had already stopped losses, while the short-selling players were "harvested" by the market manipulators by a rapid rise to above 60,000 within minutes. This "fake breakout" operation led to an instant margin call for high-leverage contract traders, causing their account balances to vanish in an instant.

Behind this "fake breakout" operation lies a typical manipulation tactic. They exploit market psychology and technical indicators to create a false illusion, inducing investors to enter the market and ultimately harvesting their profits.

The Core Logic Behind Market Manipulators Playing "Fake Breakouts"

• Exploiting Market Sentiment: Market manipulators utilize market sentiment to create "fake breakout" signals, such as rapid rallies or declines, attracting investors to follow the trend and generating a large number of long and short positions.

• Manipulating Technical Indicators: Market manipulators utilize certain technical indicators, such as moving averages and MACD, to create "false" signals, guiding investors to make wrong judgments.

• The Allure of High Leverage: Contract trading's high leverage feature allows investors to amplify their gains, but it also amplifies losses. Market manipulators leverage this aspect, using "fake breakouts" to induce investors to use high leverage, ultimately leading to margin calls.

A Nightmare for Contract Traders: Risks Amplified by High Leverage

The high leverage feature of contract trading can amplify gains but also increases losses. When market manipulators execute "fake breakout" operations, high-leverage players are more susceptible to being "harvested." If investors use high leverage, even minor price fluctuations can lead to significant losses, even margin calls.

Staying Away from the Market and Waiting: A Wise Choice?

Faced with "fake breakouts" by market manipulators and the market's high volatility, staying away from the market and waiting might seem like a wise choice. The recent market trend is unstable. Both new and experienced traders should exercise caution and avoid blindly entering the market.

Important US Economic Data Approaching: How to Interpret Its Impact on the Market?

In addition to the market's own volatility, external factors can also have a significant impact. Recently, the US will be releasing important economic data, such as the Producer Price Index (PPI) and Consumer Price Index (CPI). This data will have a major impact on whether the Federal Reserve cuts interest rates and by how much, consequently influencing market trends.

CPI vs PCE: Understanding the Deeper Meaning Behind Inflation Data

CPI and PCE are both important indicators for measuring inflation, but their focus areas differ. CPI is the most intuitive data used to assess inflation, reflecting changes in consumer prices. PCE, on the other hand, focuses on measuring personal consumption expenditures, reflecting the inflation trends that the Federal Reserve is most concerned about.

• Significance of CPI: CPI data is easier to understand and widely used, reflecting changes in consumer prices.

• Significance of PCE: PCE focuses on measuring personal consumption expenditures, reflecting the inflation trends that the Federal Reserve is most concerned about.

Data Interpretation and Market Impact:

• Higher CPI Data: Represents a rapid rebound in short-term inflation, indicating strong inflationary pressure, which will affect the probability of a September interest rate cut and the extent of the cut.

• Lower CPI Data: Demonstrates a rapid decline in consumer willingness, which will bring more negative sentiment about a US economic recession.

Summary: The primary focus is on CPI data. If CPI data remains stable, the impact of other data is weaker. If CPI data experiences significant fluctuations, other data could exacerbate the impact caused by CPI anomalies.

Interest Rate Cut Expectations and the Cryptocurrency Market: Opportunities and Challenges

Increasing data and analyses indicate that the Federal Reserve will cut interest rates in September, which is a positive signal for risk assets such as cryptocurrencies and meme coins. However, the market is forward-looking. As investors rush to buy before the rate cut, cryptocurrency prices may surge in August.

Investment Opportunities: Seizing Buy Opportunities at Local Bottoms

Following the cryptocurrency crash earlier this month, several large-cap and mid-cap meme coins have approached local bottoms, offering an excellent buy opportunity for sideline investors.

The Cycle and Trend of Altcoins: Will the Altcoin Bull Really Come?

Recently, several altcoins have experienced price rises, sparking investor expectations for an "altcoin bull." However, most altcoins currently are in a bear market, with only a few large-cap coins still struggling above water.

The Possibility of an Altcoin Bull:

• Inflow of External Funds: An altcoin bull needs an influx of external funds to drive market growth.

• Cyclical Nature: The cycle of altcoins is faster than Bitcoin, often completing a six-month or year-long Bitcoin cycle in a few weeks or days.

Challenges for an Altcoin Bull:

• Reduced Market Strength: Market traders have shifted from trading interest rate cut expectations to interest rate cuts + recession and the extent of the cut, resulting in reduced market strength and increased divergence.

• Constraints by Large-Cap Coins: The growth of altcoins will be influenced by large-cap coins.

Analysis of Popular Coins:

$SATS: A significant daily candlestick emerged, reaching the previous high point, with volume more than double the previous day. The daily MA30 line shows an upward trend, while MACD is above the zero axis, indicating strengthening bullish momentum. A brief adjustment is expected before continuing to challenge the 3,600 resistance level. Existing spot chips purchased at a low price can continue to be held.

$ORDI: Influenced by the rise of Bitcoin, a bullish candlestick emerged. The daily MACD formed a bullish crossover below the zero axis, although the daily MA30 line is slightly downward, the price is close to the MA30 line, indicating a positive trend. The key lies in Bitcoin's performance, with resistance at 34 and support at 27.

$SUI: Currently trading at $0.9938, previously in a downtrend within the descending channel, but recent trends have broken this pattern. Despite retracement, the SUI price remains bullish, and a small bull market may be imminent. If it breaks the resistance level of $1.2 or the 200-day moving average, the price is expected to rise further and challenge the $1.44 resistance level.

Conclusion

The "fake breakout" operations by market manipulators are a nightmare for contract traders but also offer potential investment opportunities for investors. In the face of the market's high volatility and risks, investors need to maintain composure and rationality, avoiding being misled by "fake breakouts." Simultaneously, investors should pay attention to the impact of external factors, particularly important US economic data, and formulate rational investment strategies based on market trends and their own risk tolerance.

Disclaimer: This article is for informational purposes only and does not constitute investment advice. Investing involves risk, and caution is advised.