Many people cannot distinguish between a bull market and a rebound. Lihui summarizes it in a simple sentence: A rebound is a brief rise within a downtrend; a bull market is a long-lasting upward trend. Looking at the present situation, it can only be considered a rebound after an oversell and cannot be directly deemed a full-blown bull market. Take Ethereum as an example; after a drop to around 1500 USD in June, it formed a low-level consolidation rebound for two months. Currently, it has only risen to the key range of MA450 and MA500 on the daily chart, which already meets Lihui's rebound expectations. Additionally, Lihui believes it might reach a peak this year; this range is particularly critical, as the weekly chart has also just reached this point, clearly indicating it can decide whether a true bull market has arrived. If it cannot break through 2810, the yearly high may be formed at this point; of course, it does not rule out the possibility of significant favorable news leading to a bull market! Therefore, it is necessary to manage high-position trials defensively!
Now let’s talk about the bull market; it means the market moves upward for a long time, with higher highs and rising lows during corrections, lasting for several months or even longer. Just like last July, when it broke through MA450, it created a strong rebound that marked the beginning of a bull market, and only then did the daily moving averages maintain a bullish order. From the current daily chart, the moving averages do not yet possess specific conditions; the long-term trend is bullish, but the medium-term will continue to exhibit a pullback trend;
In contrast, a bear market is characterized by a long-term downward trend, with rebounds merely being a pause during the decline. Even if there is a short-term surge, it will continue to set new lows afterwards. The overall market sentiment is pessimistic, and people are reluctant to hold positions long-term; as soon as there is a slight increase, some people think about selling to cash out, and capital continues to flow out.
Rebounds and the beginnings of bull markets look very similar, making it easy for people to misjudge. Rebounds are mostly driven by short-term capital, belonging to oversell recovery, with rapid increase but poor sustainability. Once the news or macro environment weakens, the market will quickly turn downwards. In the cryptocurrency circle, the Federal Reserve's interest rate policy is an important macro constraint; if there are still interest rate hikes within the year, the high-interest environment will not be completely over, making it difficult for funds to enter the market on a large scale, thus making it hard to enter a true bull market.
To determine whether it’s a bull market, one cannot only look at short-term rises; several key points must be considered: whether institutional capital can continue to flow in, if US Treasury bond yields are on a downward trend, whether regulatory news is stable, and if altcoins can experience widespread growth. Currently, it’s mostly a rebound driven by news and expectations, not a bull market with fundamentally improved conditions.
It is essential to distinguish: rebounds can be boldly played for short-term speculation, but they should not be treated as a bull market for long-term holding. Once good news is realized, or macro news turns hawkish, the market can easily drop back quickly. The cryptocurrency market is highly volatile, and the risks associated with contract leverage are even higher; heavy positions are not recommended! The above is merely Lihui's personal opinion and does not constitute any investment advice.
I, Lihui, interpret world economic news and analyze global cryptocurrency trends. During my studies in the United States, I conducted in-depth research on mainstream cryptocurrencies like BTC, ETH, NVDA, and TSLA. For those who are unsure about operations, you can scan below to follow the WeChat public account: Zhang Lihui 6
This article is exclusively published by Zhang Lihui and is for reference only, at your own risk! In the end, Lihui would like to say to cryptocurrency friends: In trading, what truly matters is not the ability to predict price movements, but rather maintaining your composure.
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