Evening Interpretation 12.1

This weekend there were indeed too many negative factors. First, a meeting was held by 13 domestic ministries to jointly combat virtual currency speculation. Compared to the 7 ministries in 2017 and the 10 ministries in 2021, the scale has expanded this time. Three more departments have been added compared to the 2021 meeting, namely the Ministry of Justice, the National Development and Reform Commission, and the Central Financial Office, which are respectively responsible for legislation, resource control, and strategic coordination.

This marks an upgrade of the regulatory approach to a full-chain integration of finance and law enforcement, emphasizing that virtual currencies do not have the status of legal tender as stated in the 924 announcement. Related business activities (such as trading, exchanging, mining, and stablecoin issuance) are classified as illegal financial activities and are completely prohibited. In summary, this is definitely a major negative and panic-inducing policy for domestic cryptocurrency practitioners and traders. I remember when Trump was fully supporting the crypto market, many foreign media speculated that China would reopen the market; looking back, it was indeed wishful thinking. The crypto market is just a way for funds to escape and bypass foreign exchange controls, leaving only dead ends domestically. There are also reports that foreign exchange inspections have escalated again; previously, personal remittances abroad of $10,000 would trigger an automatic review, but now it's $1,000 that needs to be reviewed. The trading volume of stablecoins in Yiwu has reached a scale of $10 billion. Therefore, if you are wholeheartedly treating crypto as a career, it’s best to go abroad. Currently, staying in the country poses risks, as there might be consequences later. However, this meeting has not had an immediate impact on the market because there have been too many crackdowns before; those who needed to go overseas have already done so, and those who needed to exit the market have exited. Furthermore, this meeting was only to discuss and not issued in the form of a notification like the 924 announcement, which implies that a conclusion has already been reached, thus increasing its impact. However, this format of meeting also leaves room for a summarizing notification to come out later, which may cause the market to panic again. Today's market drop could also be influenced by this aspect, and risk-averse strategies have begun as work resumes on Monday.

Another important news that affects the price of the coin is
The Governor of the Bank of Japan, Kazuo Ueda, stated that if the forecasts for economic activity and prices come true, the Bank of Japan will continue to raise policy interest rates based on improvements in the economy and prices. The negative impact of Japan's interest rate hikes has been mentioned countless times before; last year, there was a jump that cleared ETH, leading to a direct market crash. This time, the central bank governor has directly adopted a hawkish stance, causing panic in the market. Many people are unsure about the relationship between Japan's interest rate hikes and the cryptocurrency market, but this is actually easy to explain. Japan has always had a zero or negative interest rate, and this has been long-term, which has led many intelligent institutions to borrow yen from Japanese banks to invest in products with higher interest rates, such as the US dollar, US Treasury bonds, US stocks, gold, and cryptocurrencies, allocating different proportions depending on risk levels. In other words, Japan's low-interest rates have actually provided liquidity to risk markets. Now, the interest rate hikes will inevitably lower the interest rate differential for these institutions, leading to a sell-off of risk assets to repay yen borrowings, which is equivalent to draining liquidity from the market. Therefore, the negative impact is significant, and cryptocurrencies, which are highly influenced by liquidity, will inevitably be the first to be sold off, resulting in a major bearish sentiment. Even Arthur, the little black one, has stated that the main reason for this decline is the news of Japan's interest rate hikes.

Then there’s a little rumor that Trump has already finalized the candidate for the Federal Reserve Chairman, which is Hasset, and that Powell will announce his resignation at the emergency meeting on Monday night. Although Hasset himself has come out to refute the rumor of being elected early, if Trump nominates him, he would be very willing. Currently, on Polymarket, Hasset's election probability has already reached 72%, making him indeed a strong contender. Theoretically, Hasset's ascension would be a positive signal for the market, but with an early confirmation and Powell stepping down ahead of time, there is still a lot of uncertainty and impact on the short-term market. After all, Powell's resignation would raise concerns about the independence of the Federal Reserve, which is also one of the reasons for the drop in cryptocurrency prices today. Additionally, a rate cut in December is basically certain, with the probability of a 25 basis point cut on Polymarket already reaching 89%, and 87.6% on CME. The market has basically priced this in, but there are just too many other negative factors.

Then there is a negative event regarding MicroStrategy.
Strategy CEO seems to be a bit softening and admitting defeat, previously always claiming that they would never sell Bitcoin, but over the weekend they said
Only when the company's stock price falls below its net asset value and cannot obtain new funds will the sale of Bitcoin be considered. Currently, MicroStrategy's mnav is 1.13, which means that if the stock price continues to fall, MicroStrategy may have to sell their coins. The market has already predicted that this will inevitably happen, just like when ETH would be liquidated on-chain every time it dropped. Now it's the turn of DAT companies to be liquidated. Institutions holding coins with good financial conditions may use their financial advantages to target those DAT companies with high debt ratios and high financing costs, and then buy in at low prices. Similarly, bmnr is even more dangerous; mstr claims to have made over a billion, while bmnr has actually lost over 4 billion. If the market continues to liquidate these two big players, then the coin price will continue to drop.

In the altcoin sector, the entire market has cooled down. Recently, the counter-trend ZEC has also been cut in half from its peak, and the entire privacy sector experienced the most pullback over the weekend, with ZEC dropping by 60%. DCR and DASH have also pulled back by more than 20%. There are also several projects affected due to malicious actions by market makers, such as $m and others, which have directly halved in value. Newly listed altcoins have also successively halved in value. $sahara , as the first ICO of CB, couldn't hold up either. After selling out, Arthur directly claimed that this project would drop by 99%. The founder responded in various ways, boasting about the technology, but the market doesn't lie. The peak value was directly cut in half. Another top-tier new coin, $mon , is also on a downward trend and is currently close to its issue price. It seems that no matter how strong the background or low the valuation of newly listed coins is, if they are listed on any major exchange, holding onto them for a week will likely result in losses. This is a reflection of the current market; regardless of the coin, you need to sell at the peak of attention. Otherwise, you'll face the result of being trapped. The same goes for upcoming new coins, whether it's MegaETH, Stable, or Base, Arc, Sea, Polymarket—if you dare to issue coins today, you must exit within three days. The only coins worth holding long-term are a few like BTC, ETH, and SOL; the rest have no moat.