Metrics Ventures: The mid-market loading in the crypto market has reached 85% progress

Source: Metrics Ventures

Introduction:

• BTC has broken through $40,000, and our previous expectations have been realized. BTC and ETH have entered a bullish structure at the chip level, indicating that a new bull market cycle has begun.
• There will definitely be adjustments to clean up profit-taking and high leverage. The goal is to reset costs above $30,000. A reasonable pullback position is around $35,000.
• Key time points for significant adjustments include the January ETF decision, April halving, and the potential ETF approval in June. Especially in January, regardless of the ETF outcome, the market may decline.
• The real bull market will only start after the April halving and the June ETF decision. We should focus on the adjustment window at the end of December to reposition.

This article is MVC's commentary on the December cryptocurrency market trends.

In MVC's November report, we believed that BTC breaking $30,000 would lead to $40,000. With BTC breaking $40,000, our expectations have been realized. ETH has already crossed the bull-bear dividing line of the weekly MA120, and both BTC and ETH have entered a bullish structure at the chip level, allowing us to conclude that a new bull market cycle has begun.

For those who have already bought spot below $28,000 for BTC and below $1,700 for ETH and plan to hold long-term, I suggest moving this portion of the position to a cold wallet now, choosing to look away and wait until after 2025 to transfer back to trading.

As for the question everyone is most concerned about now: will there be a pullback, and when? I believe this is not the right question. There will definitely be a pullback, but the real question is, when a 20-30% pullback occurs, will you dare to go all in?

The early development of the market will certainly be tortuous and winding. We believe that the monthly mid-line trend from early October to now has loaded to 85% progress. BTC and ETH are clearly entering an accelerated sprint. It doesn't matter much what price level this acceleration reaches; the last 20% of the acceleration could push up to $45,000 without issue, and if it fails to reach that and suddenly drops to $42,000, it wouldn't be surprising either. Predicting such a specific peak is meaningless.

As for adjustments, they will certainly happen. The market's euphoric sentiment has boiled over, with BitMEX funding and premiums nearing emotional peaks. From the perspective of profit-taking ratios, the current on-chain BTC profit levels are approaching those of July and October 2020. The short-term profit-taking levels are already quite high, so we need to clearly recognize that adjustments will happen, and we must understand the main purpose of these adjustments: the primary goal of future adjustments is to clean up profit-taking and high leverage, further solidifying chips before the main upward wave of the bull market arrives.

From the perspective of expected adjustment timing, we believe there are only three key time points to focus on in the next six months: first, the mid-January BTC ETF approval point; second, the halving around April; and third, the BTC ETF approval point around June. Simply from a temporal perspective, if the ETF is approved in January, expectations will be realized, and there will definitely be a significant pullback. If the January ETF continues to be delayed, expectations will be dashed, leading to profit-taking and ultimately a pullback. Therefore, purely from the January point of view, regardless of whether the ETF is approved or not, we believe the market must decline.

Looking a bit further ahead, when the January ETF results are announced and the market pulls back, it will slowly rise until after the halving, with a second systemic adjustment expected around June. Based on our belief that the ETF will definitely be approved, it is highly likely that June will be the final approval point, providing one last opportunity to enter before the bull market starts. However, June is too far away; we need to pay more attention to the adjustment window at the end of December after this round of mid-line trends accelerates to its peak, which is also the most important layout window.

From the perspective of adjustment target space, the main costs of long-term on-chain chips are currently concentrated around $28,000-$30,000. The current price has already moved far away from the main cost zone, so the pullback will likely be completed through profit-taking. The nature of the pullback is similar to that of March to December 2020, which was a washout of profit-taking and leverage from the early bull market, allowing long-term costs to settle above $30,000. Therefore, the most extreme pullback space is to test the weekly WMA120 around $32,000 (which would be a dream come true), while a reasonable pullback position is around $35,000, which is also the cost range for all the chips that chased after BTC's breakthrough on false news.

Looking back at the market over the past two months since October, many people's biggest feeling is that the market seems to lack a particularly clear absolute main line. Throughout early November, the tokens that rebounded significantly were mainly based on chip structure logic. Many tokens experienced a violent decline due to the FTX collapse at the end of 2022, creating a huge chip vacuum, such as MATIC. This rebound has recovered the chip vacuum area from the end of 2022. Many tokens have completed a long 10-month accumulation phase, such as SOL, LINK, DYDX, etc., with very solid bottoms; or they are newly listed tokens, such as TIA, PYTH, etc. Many investors who have experienced cycles often feel trapped in a state of chaotic and aggressive trading at this stage, as if there is nothing truly new emerging, which also aligns with the characteristics of thematic rotation during a bottom rebound.

However, in mid to late November, market funds found three themes that can be called main lines during the surge: the BTC ecosystem represented by ORDI, gaming, and AI. These three themes are beginning to take shape as the main tracks.

Although many tokens have seen huge increases, we believe these three themes are 'still early'; they are still in a relatively chaotic state. Buying in is a profit, and if you haven't bought, there's no need to worry. The current market speculation on these themes resembles meme logic, with different IQ groups preferring to speculate on different meme themes: IQ 10 and IQ 150 speculate on ORDI (which can also include DePin), IQ 100 speculates on AI, IQ 50 speculates on gaming, and there are even many elite hedge fund backgrounds sticking to Perp Dex and old DeFi with their calculators. Chinese people speculate on inscriptions, Europeans and Americans speculate on POW and the Solana ecosystem, and Koreans speculate on LUNC; each has their own meme (no offense intended, I consider myself part of the IQ 50 group).

In summary, 'still early' captures everything. Let's first enjoy the joy of the accelerating wave. Right now, whether it goes up or down, it's all part of the early bull market's chip turnover phase. There are plenty of opportunities ahead. When we reach January-February, let's carefully weave our nets to catch big fish. As for the complex impacts of macroeconomics, interest rate cuts, and the U.S. stock market, we have repeatedly emphasized since January 2023 that these are not important and not the main contradictions. The endogenous cryptocurrency cycle always requires attention to the industry's natural innovation, and funds will naturally follow.