The current market sentiment overwhelmingly believes that Bitcoin is doomed, and Old K also thinks it is highly likely to break below $70,000. Of course, if any of the following three situations occur, Bitcoin may have a V-shaped reversal, so remember to go short in time, as the fundamentals have not changed in the short term.
1. One reversal script: Extremely crowded 'short covering' (Short Squeeze)
Logic: Everyone in the world knows that the Fed is going to taper, and they all know Bitcoin is going to fall. Retail investors are panic selling, and speculators are crazily opening short positions. When everyone is on one side of the boat, it not only risks capsizing but also tilting violently to the other side.
Observation signal: At this moment, if the funding rate in the futures market is already deeply negative (everyone is borrowing money to short), and the open interest is high.
Scenario: As long as a large player (Whale) or market maker buys heavily at the position of $75,000, any slight rebound in price will trigger the stop-loss line for high-leverage short positions (liquidation). Short sellers must buy to cover their positions to stop losses, which will push up the price and trigger more short stop-losses.
Result: This chain explosion will instantly pull the price back from $75,000 to $82,000 or even $85,000. This is not due to an improvement in fundamentals, but purely a 'game of killing shorts.'
Two, reversal script two: 'Bad news is good news'
Logic: The reason why Walsh dares to tighten the balance sheet is that he believes the U.S. economy can withstand it. But what if the economic data suddenly collapses?
Key nodes: This Wednesday's ADP data and Friday's non-farm data.
Scenario: If the employment data released this week unexpectedly 'disappoints' (for example, if the unemployment rate suddenly jumps, and the number of new jobs is far below expectations), the market will immediately switch from 'inflation panic' to 'recession panic'.
Reversal logic: Once recession risks are confirmed, even if Walsh remains hawkish, he will have to slow down or even hint at stopping the tightening. The market will anticipate a 'Fed surrender.' At this time, Bitcoin, as a liquidity-sensitive asset, will react ahead of the stock market, leading to a direct V-shaped reversal.
Three, reversal script three: 'The Trump Put'
Logic: This is the biggest political variable. Although Trump nominated Walsh, his obsession with the stock market is well-known. He views the rise of the stock market as his own achievement.
Scenario: If Walsh's statements lead to a continuous crash in the U.S. stock market (S&P 500) this week, not only Bitcoin but also tech stocks will collapse together. Trump will definitely not sit idly by. He may post on Truth Social or leak hints to the media through aides, suggesting that 'Walsh won't go too far' or 'we still support a loose business environment.'
Result: This political 'soothing' is the market's shot in the arm. As long as Trump expresses his support, liquidity expectations will change instantly.
