Market Down Bad I GOTTA Do Fundamental Analysis LOL

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AI Analysis

Okay, let's break down what's happening in the crypto market according to Ron and Martin in this video. The market is looking pretty rough, making technical analysis tricky on the higher timeframes. Because things are so choppy and uncertain, they're diving into fundamental and macro analysis to figure out what's going on and how to navigate it, especially comparing this Bitcoin halving cycle to the last one.

Here's the lowdown:

  • Right now, the market feels really choppy and manipulated, making pure technical analysis difficult on higher timeframes. There's a lot of hoping (copium/hopium) in the community that this current downturn is just a "fake-out" phase before a big pump, based on a common market model (Accumulation, Manipulation, Distribution - AMD).
  • Comparing this Bitcoin halving cycle (starting April 2024) to the last one (starting Nov 2020) shows something weird. The last cycle saw significant profits kick in about 40 weeks after the halving, leading to a market top around 80 weeks out.
  • However, this current cycle seems to be doing the exact opposite of the last one so far, with prices going down instead of up in the post-halving period. It looks like a "mirror image" of the expected pattern if you overlay the last cycle's price action.
  • The main reason for this difference, they explain, comes down to global macro conditions.
  • During the last halving cycle (2020-2021), the world was in the middle of COVID. Governments responded with huge stimulus packages (like Quantitative Easing - QE) and kept interest rates very low. This flooded the market with liquidity, making people more willing to invest in risky assets like crypto and stocks. Free money from governments often ended up in speculative investments ("what the degens did with the free money").
  • This current cycle is different. There's economic uncertainty and rising geopolitical tensions, but the core problem is inflation concerns. Central banks are tightening monetary policy (Quantitative Tightening) and keeping interest rates higher for longer.
  • Higher interest rates and less liquidity make investors, especially big institutions and "whales," more risk-averse. They prefer safer options like bonds or treasury yields over volatile assets like crypto. This explains why crypto is taking a hit right now – the macro environment isn't supporting risk assets the way it did last cycle.
  • There's a potential bit of hopium related to Global M2 money supply (a measure of money circulating in the economy). A chart shows a correlation (coefficient 0.824, high correlation) between M2 and Bitcoin price with a 57-day lag.
  • This suggests changes in money supply could influence Bitcoin with about a two-month delay. The current M2 reading might suggest the bottom of this relationship is near.
  • The hopium is that if M2 starts picking up, we might see a lagged bump in BTC price in about two months (potentially around January 2025 based on the chart's date reference, though the speaker mentions 57 days from "today's" reading could be May 2025). However, they caution this is a correlation analysis, not a direct price prediction, and the size of the M2 increase doesn't guarantee a proportional BTC pump.
  • Regarding Ethereum (ETH), looking at the high timeframe chart (like weekly or daily), it's been making lower highs and lower lows since late 2024, breaking major support levels and currently trading around $1.8k, near a daily order block and Fibonacci support (0.786 retracement) around $1.7k-$1.8k.
  • The question is whether big investors see value in buying ETH now given the uncertain macro conditions compared to safer investments.
  • An analysis by "Crypto Beam" suggests ETH might range between $1700 and $1400 for possibly 3-4 months before potentially a bearish retest (a temporary move up that fails) into the $2500-$2800 region. This higher area might be a good time for investors to "de-risk" or take profits.
  • Some projections from charting tools even show potential drops below $800 for ETH in the longer term, which they find hard to believe and describe as "really, really bad." But they stress nobody knows the timeline for such moves.
  • Since high timeframe analysis is difficult and potentially bearish, the strategy for trading now is focusing on low timeframe trading, specifically using techniques like Opening Range Breakout (ORB) and identifying liquidity levels. This helps make "stables" (stablecoins) and compound profits from daily momentum, acting as a hedge against the uncertain high timeframe outlook.
  • Looking at ETH on the low timeframe, they see buy-side liquidity around $1962 (an area with unfilled buy orders from previous wicks) that could be targeted for a push up. There's also high timeframe buy-side liquidity around $2862 that hasn't been fully tested (indicated by a specific charting block indicator).
  • Contrary to the more bearish macro view and some lower price targets, they think ETH might target the higher liquidity areas ($1962 and possibly $2862) before potentially sinking lower. There might not be much short-side liquidity left below current levels, making it expensive for sellers to push the price down further immediately.
  • They are looking for signs of a "relief bounce" soon for both ETH and BTC, especially if liquidity targets are hit on the low timeframe. They don't expect a sudden pump but maybe a gradual creep up initially.
  • When looking at altcoins, the market is generally "down bad." Checking CoinGecko and crypto bubbles shows many alts are significantly down from their highs (e.g., Avalanche at $18, Gala down 77%, Aptos down 60%).
  • However, some alts have performed well recently (Trump, Say, IP, Pepe) or yearly (Ondo, XRP, BitGet token).
  • They discuss specific alts like FET (Fetch.ai), noting its strong yearly performance (up 81%) related to the AI narrative earlier in the year. They wonder if AI tokens will see another push but think FET might be "finding new floors" after its parabolic pump.
  • They mention Mantra (OM) as a smart project with strong fundamentals due to its focus on Real World Assets (RWA), airdrops for stakers, and potentially having legitimate regulatory partnerships in the Middle East.
  • Regarding accumulating alts: It depends on the alt. If you have a smaller portfolio (3-4 figures), trading might be better to compound profits. If you have a larger portfolio (5-6 figures), accumulating specific alts that you believe in, have strong fundamentals, are undervalued, and have high demand potential for their token could be a good strategy for potential 2-3x gains or more.
  • Finding conviction in the alts you hold is important, just like a known trader "CC2 Ventures" who was down significantly on Hyperliquid but is holding because he believes in the project.
  • They analyze "Fart Coin" (a memecoin) briefly, showing how identifying buy-side liquidity targets on a low timeframe helped predict a reversal after it pumped. They use a Dex Screener chart to show how the pump targeted buy-side liquidity, leading to a sharp drop targeting sell-side liquidity.
  • They conclude that liquidity analysis is a very helpful tool for low timeframe trading, showing where price is likely to move next to fill orders. If no new buy-side liquidity is forming, a token like Fart Coin might continue seeking lower sell-side liquidity.
  • The overall takeaway is that while the high-level market looks grim due to macro factors, understanding these conditions and using tools like liquidity analysis on lower timeframes or focusing on fundamentally strong alts can help navigate the market. Staying informed about macro news (like interest rate decisions from Jerome Powell) is critical.

Transcript

All right, we live. Boys, welcome to Alpha Drop. My name is Ron. Martin here. And a bit of a context today for this video. So if you've been following our channel, you know that I'm primarily a technical analyst, right? I just look at price action, look at key levels, and react accordingly. But then, looking at the high time frame, it just looks so... Manipulated, would you say? Yeah, very, very choppy, right? And I know what everyone is thinking. When you're scrolling through CT, you see posts...