The market is gradually moving towards the positions we anticipated. Yesterday, it briefly fell below 78,000 and reached a low of 77,600. The market has now recovered to 78,736. I understand everyone’s excitement at making profits, but it's time for a reminder—just as everyone is happiest, I always pour a bit of cold water on things. Over the past two days, one thing has become clear: the current decline can be defined as a slow downward drift, with the negative impact of interest rate hikes already priced in in advance. This is not good news for users taking short positions. For contract traders, it’s important to pay close attention: yin and yang are complementary. If prices can stabilize above 80,000 this week, there will be some expectation for rate cuts and a clear regulatory bill. For short traders, profits may be even greater—if the expected rate cut turns into a hike, or stays unchanged, and a clear regulatory bill triggers a market crash, Bitcoin could instantly drop 5,000 to 10,000 points, forming a waterfall drop. This would mean at least a threefold increase in volatility and potential gains.
The current trend is the exact opposite: there was previously frenzied speculation about rate hikes, and Reuters today reported that US debt has surpassed 40 trillion. It's clear that capital has started taking a bearish stance and is hedging against a waterfall drop. Even if the final outcomes fully match our earlier forecasts, a waterfall effect may not materialize. Based on last week’s trend, I expected another round of extreme bull traps, but the market has diverged from this. If you are shorting, be prepared and manage your risk. Looking at the interest rate data today, the probability of a 25 basis point hike in September is 59.4%, and the probability of keeping rates unchanged is 40.6%. This also shows that a rate cut is definitely not coming, and September offers no positive news—it's all about the bears. It’s just that the strength of the decline is not as great as previously estimated. Contract traders only need to pay attention to the possibility of a sudden decision to keep rates steady on the day of the meeting, which could cause a brief rebound, but the downward trend will continue afterward.
Summary: There's no need to worry about September’s market movement; we have already covered all possible scenarios, and the only differences are between individual tokens. The CPI data no longer influences rate cut probabilities—rate cuts are completely off the table, so you can ignore any positive expectations for September and look forward to the next stage. The worst-case scenario for this year is no rate cuts, only hikes, which would likely send the crypto market into a short-term bear run. No matter the time frame, contract users shorting the market isn’t a problem. Simply manage your stop-loss positions—this is an easy profit opportunity. Ethereum’s deeper decline could be 2%-5% greater than Bitcoin, so manage your risk accordingly. For those holding hedged positions, as mentioned previously, the short entry was at 73,000; this week marks the start of unwinding, with next week being the time to exit positions. To put it plainly, even if a rate cut signal appears, there’s no way for prices to rise in September—there’s simply no upward momentum. Go ahead with short positions! As mentioned before, the market should at least retrace half of the previous three green candlesticks—this is still valid. This chart will stand the test of time!
