Expectations are more important than data; those who understand market sentiment have quietly positioned themselves.
The US CPI data came out last night, right? To be honest, I'm increasingly less concerned about the data itself. The market has long since skipped over this noise and is directly betting on a rate cut by the Federal Reserve in October— the probability has surged to 98.3%, and there's even a 93.4% chance of another 25 basis points cut within the year (totaling a 50 basis points cut).
This is the current market situation; expectations of rate cuts are key, and data is just a minor episode.
Today, I want to tell you why I believe that any pullback in the near future is a good opportunity for new investors to enter the market.
First, why is the market no longer fixated on the CPI?
Last night's U.S. CPI data showed core CPI rising 2.6% year-on-year, the lowest since 2021. Normally, this would be seen as positive, but Bitcoin quickly fell back to $84,669 after a brief rise.
Why isn't there a price increase despite the good news? Because the market has already digested it!
The Fed's focus has clearly shifted from inflation to employment. Data shows that U.S. job growth is slowing, which is what the Fed is truly concerned about. Even Fed chair candidate Hassett has stated: 'The CPI report is shockingly good; the Fed has plenty of room to cut rates.'
Liquidity is the hard truth. Once the interest rate cuts are implemented, it means that the cost of funds will decrease, and a large amount of cheap capital will flow into risk assets, with the highly volatile market of cryptocurrencies being the first to benefit.
Second, what does interest rate cutting mean for the crypto space?
History does not repeat itself exactly, but it often rhymes. In past interest rate cut cycles by the Fed, the digital asset market has often shown stronger resilience.
First, funds will concentrate on mainstream coins. According to Binance wallet data, its platform's stablecoin balance surged by 17% within 24 hours after the interest rate cut announcement. This money is not coming to buy up altcoins but will prioritize flowing into BTC, ETH, and other 'blue-chip' coins in the crypto world.
Second, institutions have already laid out their strategies in advance. Companies like MicroStrategy continue to buy Bitcoin, and institutions like BlackRock are also positioning themselves in the crypto space. They have caught the trend, while ordinary investors are still worried about the monthly data.
The current total market capitalization of cryptocurrencies is approximately $2.87 trillion. Although there has been a recent decline, it remains at a high level overall. What does this indicate? It indicates that capital has not left this market; it is merely adjusting positions.
Third, how should newbies respond to this wave of market activity?
From my years of observing the market, the most common mistake newbies make is 'chasing highs and cutting losses, emotional trading.' At this point, I suggest you remember three things:
First, don't be intimidated by short-term fluctuations. Even if the market experiences volatility after the CPI data is announced, it could be temporary. Bitcoin's current key support is in the $85,000 - $85,200 range. If this level holds, it is very likely to test the resistance area of $88,000 - $90,000.
Second, mainstream coins are your safe haven. For newbies, Bitcoin and Ethereum are relatively safe choices. Especially Ethereum, which, although weaker than Bitcoin, may offer greater elasticity when funds return after interest rates are cut.
Third, control your position; never go all in. I suggest newbies adopt a gradual accumulation strategy, such as splitting the planned investment funds into 3-5 portions and adding one portion at each support level reached. This way, you won’t miss out on market movements, nor will you be caught off guard due to misjudgment.
Fourth, my personal trading strategy
To be honest, I have already been gradually increasing my positions. But it's not about blindly chasing highs; instead, I'm waiting to buy in batches when there is a pullback.
For example, with Bitcoin, I would position myself for the first trade near $85,000. If it drops to the $83,650 - $84,000 range, I will add a second position. For Ethereum, I will look for opportunities near the support range of $2,750 - $2,775.
Why do this? Because the market often experiences volatility in the anticipation phase before interest rate cuts. Expectations of interest rate hikes by the Bank of Japan and other geopolitical factors may trigger short-term pullbacks, but these pullbacks provide us with better entry points.
Don't forget, on December 26, there are $23 billion worth of BTC options expiring, which could amplify market volatility. For newbies, this represents both risk and opportunity.
In conclusion
Investment is not about betting on data, but betting on trends and probabilities. When the high-probability event of interest rate cuts is about to happen, what we need to do is not to get entangled in the subtle fluctuations of each data point, but to seize the trending opportunities.
Think back to what those who panicked and sold during the Fed's most aggressive rate hikes last year missed out on. Now the market has given a second chance; can you seize it?
Remember, in the financial market, newbies earn money from trends, not from guessing data. Interest rate cuts are the clearest trend for the next few months. Understanding this means you have already surpassed 80% of retail investors.
Stay calm and position yourself steadily; we can all catch this wave of interest rate cut benefits.
