Traders' Full Forecast for the Next Two Years: Bitcoin Enters Early Bear Market, Gold to See a Decade-Long Bull Run

Chainfeeds Guide:

The real liquidity flood may not come until May next year, after Trump takes control of the Federal Reserve, similar to March 2020.

Source:

Author:

Ban Mu Xia

Opinion:

Ban Mu Xia: Bitcoin has ended its traditional 4-year cycle and entered the early stage of a bear market. The recent explosive rallies of many veteran altcoins also confirm this point. At the end of every Bitcoin bull market, veteran altcoins always experience a super rally. However, this bear market cycle is likely to be greatly shortened due to the arrival of the US stock AI bubble. Gold is in a major cycle of transition between old and new monetary systems. As long as this transition cycle is not over, gold will continue to rise, so after this round of correction, gold can be held long-term for another 10 years. The US stock market cycle is basically the US debt cycle. According to the views of several economic experts, the US debt cycle has entered its later stage but is not yet over, because the key overheating indicators have not yet appeared, although there are already some signs of overheating. Will this AI revolution definitely create a bubble? Almost certainly, because every major technological revolution sees participants fearing to miss out, leading to excessive capital expenditure and even heavy borrowing, starting to tell stories. In terms of liquidity, only the US liquidity situation is considered. Recently, due to government shutdowns and ongoing balance sheet reductions, US liquidity conditions have been very tight, with the SOFR-RRP spread reaching levels seen during the COVID-19 period. This may also be part of the reason for the recent declines in US stocks and Bitcoin. Therefore, I am not optimistic about the US stock and Bitcoin markets in the near term. However, the recent US government shutdown is about to end, which will improve the recent liquidity crunch, and under this expectation, the market has rebounded rapidly. But this is only an improvement and does not constitute the conditions for a continued bull market. Starting in December, the Federal Reserve will stop reducing its balance sheet and is very likely to start expanding it again. At that time, the liquidity environment for US stocks and Bitcoin will improve significantly. But this is just a return to normal liquidity, similar to October 2019. The real liquidity flood may not come until May next year, after Trump takes control of the Federal Reserve, similar to March 2020. The above forms the basis for expecting market volatility in the short term, slight upward movement in the medium term, and a major surge in the long term. As shown in the chart, Bitcoin is in a large-scale wave 4 correction, which is usually a sideways adjustment, especially when wave 2 was a steep correction. This is why Bitcoin is expected to move sideways in the coming months, and combined with the analysis of cycles and liquidity, there is no support for a deep decline in Bitcoin. Gold is in a correction against a 10-year bull market, and such a correction is unlikely to be completed within two or three weeks. However, since gold is in a major cycle of transition between old and new monetary systems, with continued purchases by emerging market central banks as support, the magnitude of this correction will not be too large. Therefore, the 0.382 retracement level at 3100 can be used as an extreme target. More likely, the correction will find its end between 3350 and 3750. If you are afraid of missing the next 10-year rally in gold, you can buy directly below 3750. The correction in US stocks is the most uncertain, but as long as the upward cycle is far from over, every correction is a buying opportunity. The AI bubble will definitely come, but will it definitely burst? This may be the fate of every early stage of a technological revolution. Companies that borrow heavily and engage in high-leverage mergers and acquisitions for fear of missing out may see low capital returns in the early stages of the technological revolution due to an immature market. Once this becomes apparent, the story may start to crack. If the Federal Reserve then tightens monetary policy due to excessive liquidity leading to rising inflation, the bubble will burst.