Recent market rebound: is it a "kill the shorts" move or a successful bottoming? The sword of interest rates still hangs overhead!

Bitcoin has rebounded from the lows around $59,000, and market sentiment seems to be stirring again. Some friends might think the reversal has arrived. But I believe this rebound is at best a technical correction, and the bottom likely still needs further testing. As early as October last year, when Bitcoin was above $100k, I published an analysis article based on the Bitcoin halving cycle, clearly indicating that $126,200 is the top of this cycle, and the market will enter a sustained bear market. This judgment has now been validated.

The key variable this year remains the Federal Reserve's interest rate path. Currently, the Fed is neither "considering rate cuts" nor simply "holding steady"—rate hikes have shifted from a theoretical option to a high-probability event priced into the market and predicted by investment banks. This Wednesday’s CPI data will be the next critical catalyst: if inflation continues to rise beyond expectations, the likelihood of the Fed signaling a rate hike at the June meeting will increase significantly, and the market could face a substantial downside space.

The MVRV Z-Score indicator reads 0.24, leaving some room for further decline. Historically, the true bottom zone tends to fall between -0.3 and -0.6, at which point it’s suitable for bold spot positions. Therefore, the current strategy remains mainly to follow the trend and go short high.

Looking at the chart, Bitcoin faces resistance in the $64,300–$65,000 range, where short positions can continue to be played; support levels are at $62,300 and the previous low around $59,000. The bottom area in this cycle is around $53,000, with an extreme case near $45,000—if it reaches this level, I will heavily allocate spot positions.

For Ethereum, focus on resistance levels at $1,717–$1,750–$1,818, and support levels at $1,638–$1,500–$1,444. In extreme market conditions, look at the $1,122–$800 range, and similarly, large-scale spot positions can be deployed in batches.

This article reflects Jiang Feng’s personal views only and does not constitute any investment advice. Market trends are influenced by multiple factors, and any judgment may be biased or even wrong. Make independent and cautious decisions based on your own situation. Do not blindly follow others, pay attention to position management and risk control, and bear the profits and losses yourself.

Written by: Jiang Feng Capital
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