Bitcoin Price Continues to Decline as Risk Aversion Intensifies: Tonight's Nonfarm Payroll Data Could Be CrucialTonight's Nonfarm Payroll data will be the market's focus, potentially causing significant volatility in Bitcoin's price in the short term. If the data shows a rate cut and good unemployment rates, it will be bullish for the market, and Bitcoin's price could rebound; conversely, if there's a rate cut but poor unemployment figures, it signifies a heightened risk of recession, and Bitcoin's price may further decline
Bitcoin Price Continues to Decline as Risk Aversion Intensifies: Tonight's Nonfarm Payroll Data Could Be Crucial
Tonight's Nonfarm Payroll data will be the market's focus, potentially causing significant volatility in Bitcoin's price in the short term. If the data shows a rate cut and good unemployment rates, it will be bullish for the market, and Bitcoin's price could rebound; conversely, if there's a rate cut but poor unemployment figures, it signifies a heightened risk of recession, and Bitcoin's price may further decline.
Recently, Bitcoin's price has been in a state of gradual decline, with a pessimistic market sentiment. The price has been oscillating back and forth, with a continuous decline in closing prices. Yesterday, Bitcoin's daily chart fell below the crucial support level of 57,500, closing at a new low since the rebound in early August. Meanwhile, the moving average lines have started to shift downwards. Although still in its early stages, a diverging trend is brewing.
Short-term trading has become meaningless, and the market situation is perplexing. The price has been falling most of the time, but each drop hasn't been significant, followed by a sudden pullback with a positive candle or a long lower shadow, giving short-term traders the constant impression of opportunities to buy but repeatedly leading to stop-losses. This downturn isn't smooth but rather a series of dips and rebounds, with the daily price constantly hitting new lows. This agonizing trajectory is unbearable, starkly contrasting with the rapid decline from 60,000 to 29,000 in 2021.
Currently, the price of 55,600 doesn't appear to be the bottom, and the market situation remains uncertain. For bulls, the best scenario would be an accelerated decline soon, possibly attracting a large volume of buy orders due to the low price, as seen in previous instances. A quick crash isn't scary; the most frightening aspect is the gradual decline with shrinking volume, where the price continuously breaks through support levels. Therefore, it's crucial to patiently wait for an accelerated decline, which could gradually warm up the market. Until then, it's best to avoid buying with the intention of holding long-term.
Recently, a large amount of bearish liquidity has accumulated above the price but hasn't been liquidated yet. This back-and-forth, seemingly endless market situation might take some time to resolve. By waiting for the market's selling pressure to subside, maybe we'll see a rapid surge upwards represented by a positive candle. Bitcoin's sustained decline lately, coupled with the pessimistic market sentiment and the back-and-forth oscillations, resulting in a continuous decline in closing prices, has led to poor performance in spot altcoins. Many individuals are starting to shift their focus to shorting contracts or using high leverage for trading the market's fluctuations, which is the mindset that market makers want to cultivate.
Based on the above analysis, the worst-case scenario is that tonight's Nonfarm Payroll data is negative, pushing Bitcoin down to around 54,000, swallowing up the remaining bullish inventory. Subsequently, market panic intensifies, shorting sentiment spreads, and ultimately a quick pullback leads to a short squeeze. Another possibility is that tonight's Nonfarm Payroll data is positive, directly squeezing out short positions, followed by a slow and steady decline.
In summary, the current market conditions offer a low risk-reward ratio for shorting. The market appears to favor bulls, and currently, the market is at a tipping point between bulls and bears. Altcoins are all consolidating at the bottom of their daily charts, making the risk-reward ratio highly favorable. We should act according to our understanding of the situation, position ourselves for a bullish market, and seize the opportunity for a potential widespread and powerful rebound. If we wait for the price to rise before buying, it might be too late.
The analysis suggests two possible scenarios: to prevent a potential scenario where the market makers first crash the price to absorb bullish liquidity, followed by a violent rebound, we can implement a strategy of buying in stages. If the price dips and recovers, it will align with our expectations, and the strategy will be more comfortable. If the price rises directly, having a starting position prevents missing out on the upward momentum. As a worst-case scenario, even if the price dips and recovers before ultimately declining gradually, there's still an opportunity to identify the right time to exit, making the bullish strategy more likely to succeed.
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