I’ve been mulling over the logic behind the sharp drop in 519, and I’ve found some pretty interesting things.

You know, since 312 last year, BTC has climbed from 3,800 to 65,000—up 17x—with almost no decent shakeouts in between. This means that the vast majority of investors are sitting on profit, and the cost basis of institutional holdings is mostly in the $20,000–$30,000 range—often even higher than many retail investors.

The 519 crash looks like it’s clearing leverage, but in reality it’s carrying out a thorough reshuffling of hands. Those who had been holding from the bottom were forced to exit, and the cost for new investors is all above 30,000. This is the key point I want to emphasize: the cost basis is rising rapidly, and that rise itself becomes the foundation for the next leg up.

Think about it: after profitable positions rush out quickly, the amount of sellable coins later on keeps getting smaller and smaller. New investors’ costs are all above 30,000, and they won’t consider selling unless it goes beyond 50,000. Meanwhile, the coins locked in by institutions are basically immovable. As a result, demand will inevitably be greater than supply, and once the panic released after the 519 event passes, Bitcoin will naturally restart its upward momentum.

But there’s a prerequisite here— the backdrop of inflation can’t change. Federal Reserve’s Kaplan recently said inflation will rise in 2021, and balance sheet reduction will most likely be pushed into 2022, so the current easing environment this year is still stable. This is a necessary condition for Bitcoin.

Regulation here is indeed tightening: the U.S. Treasury requires reporting for crypto assets exceeding $10,000, and the SEC is pushing for more oversight. Domestically, there are repeated risk warnings as well. But I think these are actually signs that the market is maturing—and are beneficial to the ecosystem in the long run.

What’s interesting is that big institutions are still continuing to enter the market. The founder of KKR said they invested in cryptocurrencies. The CEO of Goldman Sachs predicts that the crypto market value will eventually surpass gold. The CEO of Tiantiao Capital believes the Bitcoin bull market isn’t over. And the real actions by big names like Musk, “Wood,” and Sun Yuchen also say it all—they’re still buying.

From a technical perspective, the rebound after 519 is shockingly similar to 312—both are about 47%. This suggests the short-term rebound may already be at its peak; afterward, it will likely trade in a range and then conduct a second dip. Compared with the 312 move, the dip-buying range for the second bottom should be between 32,000 and 35,000. When that happens, there’s no need to panic—this will be an opportunity.

Right now, the Fear & Greed Index is only 19, which puts it in an extreme fear zone. That alone is a signal that opportunity outweighs risk. Grayscale’s GBTC is trading at a 10.6% discount, and funds in the U.S. equities secondary market are also starting to warm up.

For different coins here: Ethereum is oscillating in tandem, waiting for a second-dip opportunity. DOT has seen very strong bottom-fishing inflows in the past two days—holding for upside is recommended. LINK and SUSHI also show signs of bottoming. BCH is relatively strong and has room to keep rebounding. As for DOGE, Musk is still “feeding” it, but the community is full of backlash and his influence is declining. The coins trapped in Dogecoin are hard to rescue, and the rebound is mainly driven by short-term profit-taking and reducing positions.

Overall, the 42,400 high level is unlikely to be broken in the short term. If it does break through, the next resistance would be around 45,000. My simple advice at this point is straightforward: below 40,000, only buy, don’t sell. The correction after the 519 event is essentially a shakeout, and the rebuilding of the cost basis will set the stage for the next rally. Be patient—opportunity is right in front of us.