The big pie (BTC) surged to 76,000 US dollars in one breath, and the entire network liquidated 650 million, and short sellers were pinned to the ground and rubbed 500 million.

Some people shouted Niu Hui, others shouted run quickly. Jiao Lian looked at the data on both sides and found that what was interesting was that for the same thing, two groups of people came to completely opposite conclusions.

Shorts’ concerns

Cointelegraph raised a question: Will this rebound be a bull trap?

What is a bull trap? That is, the price surges briefly to trick people into buying it, and then turns around and traps those chasing the higher price.

The direct trigger for this rise is the March PPI data in the United States. The producer price index rose 4% year-on-year, lower than market expectations of 4.7%. Sounds like good news, right? If inflation is not so fierce, the Fed does not need to raise interest rates so harshly.

But here comes the problem. CryptoSlate reported that short sellers lost $515 million in this liquidation, the worst loss since February. This level of short squeeze often means that the rise is driven by forced liquidations, not active buying of real money.

The rise driven by forced liquidation is like a rubber band that is tightened and then suddenly released - it bounces quickly and falls back quickly.

Bulls’ confidence

But after reading the Cointelegraph article, the teaching chain found that they finally rejected this question.

Their core arguments are three.

First, the Federal Reserve is already expanding its balance sheet. Beginning in January this year, the Federal Reserve changed its strategy from shrinking its balance sheet to expanding its balance sheet. With more money in the market, risky assets will naturally benefit.

Second, oil prices are still above $90. The conflict in Iran has not subsided, and if oil prices cannot come down, inflationary pressure will continue. As a scarce asset, BTC will be used to hedge against inflation.

Third, there are not many profit margins. BTC has been consolidating around US$68,000 for two months. This time it rose to US$76,000, which is an increase of just over 10%. For those who opened positions at the bottom, this increase is not enough to fill their teeth, and there is no motivation to sell at all.

Cointelegraph's final conclusion is:The probability of a successful bull trap occurring is extremely low.

There is a new angle

CryptoSlate quoted Bitwise chief investment officer Matt Hougan as saying, providing a new perspective.

Since the United States and Israel began air strikes on Iran on February 28, Bitcoin has risen by 12%, the S&P 500 has fallen by 1%, and gold has fallen by 10%.

This data challenges an old concept -BTC will fall whenever it encounters a geopolitical conflict.

Hougan's view is that BTC may now play two roles. One is a digital scarce asset that competes with gold, and the other is a neutral settlement tool in the context of the fragmentation of the global payment system.

Of course, some people pointed out that this may just be because BTC fell early. BTC had already fallen from its highs before February 28, and when traditional assets began to fall, it was already on the way to rebound.

Another line

The data on both sides are true, and the logic has its own truth. They just stand on different time scales and analysis frameworks.

But the teaching chain is looking at another line-200-week SMA. Some time ago, it was probably between US$57,000 and US$60,000, and it is slowly moving up.

Blockstream CEO Adam Back said at the end of March that the 200-week SMA exceeded 59,000, which is a new mathematical bottom for BTC and has never been effectively broken down in history.

Jiao Lian feels that this is too full. What is an effective breakthrough? If it is defined as never coming back, then no moving average of BTC has ever been effectively broken down - because BTC has been hitting new highs in the past 17 years, and all the breaks were eventually recovered.

In the second half of 2022, the price was suppressed by the 200-week SMA for nearly a year, reaching as low as $15,000, while the 200-week SMA at that time was $24,000. If someone buys the bottom at 24,000, he will have to bear a floating loss of nearly 40% and wait half a year to get out of the trap.

Between two lines

BTC is now hovering around 75k.

100-week SMA is about $88,000, which is the roof. The 200-week SMA is about $60,000, which is the floor. Prices are stuck in the middle, about 15k off the floor and 12k off the ceiling.

Short sellers say: The historical rule is that after falling below 100 weeks, it will hit 200 weeks. Although the time window has passed now, who knows?

Bulls say: The macro is changing, institutions are advancing, and the 200-week trend is moving up. This time is different.

The teaching chain does not know what is right and what is wrong.

But Jiaolian knows one thing: the 200-week SMA moved from 57,000 to 60,000, the price dropped to 60,000 in February and then rebounded to 75,000, and the distance between the two expanded from 3,000 US dollars to 15,000 US dollars. As the distance increases, the possibility of hitting 200 weeks in the short term decreases.

Don’t chase highs

Some people may ask: Jiaolian failed to buy it to the end near 65,000, and now it has rebounded to 75,000. Is it time to pursue it?

Teach the chain not to chase the high.

Jiao Lian remembered the story of an old hunter.

The hunter went into the mountains to hunt and saw a prey running past his eyes. He didn't shoot because the distance was too far and he couldn't be sure. The prey ran away, and the people next to him said, "It's a pity. If the shot just now had been fired, it might have hit."

The hunter said, I didn't shoot, at least I still have bullets. If I shoot randomly as soon as I see my prey, sooner or later I will run out of bullets. By that time, if I encounter a good opportunity, or worse, if a beast pounces on me, I will have nothing in my hand.

The same goes for transactions.

If you miss an opportunity, all you lose is that possible opportunity. But if you force yourself into the car because you are afraid of missing out, and shoot at the wrong position, you will lose bullets, capital, and you will no longer have the strength to pull the trigger when the next real opportunity comes.

Jiao Lian also remembered the scene of waiting for the bus.

You were waiting for the bus at the platform. When a bus came, it was too crowded, so you didn't get on. The car drove away and you were a little anxious. What is the correct approach at this time? Keep waiting for the next bus. Instead of chasing the bus - you won't be able to outrun it and will tire yourself to death.

Bitcoin has been on the road for more than ten years. If you miss one class, there is always the next one. Those who missed $20,000 in 2017 will receive $4,000 in 2020. Those who missed out on $69,000 in 2021 will get $15,000 in 2022.

The market will always leave room for the patient.

So Jiaolian will not chase higher on the rebound. The teaching chain will just wait patiently.

If the market really gives the opportunity to bring the price back to an exciting area, Jiaolian will take a serious look. If you haven't waited, keep waiting.

A person with bullets in his hand is called a hunter. Those who don’t have bullets in their hands are prey.