Orange Evening Interpretation 12.1

This weekend there are too many negative factors. First, a meeting was held by 13 domestic ministries to jointly crack down on virtual currency speculation. This time, the scale has expanded compared to the 7 ministries in 2017 and the 10 ministries in 2021. Three more departments have been added compared to the 924 meeting, namely the Ministry of Justice, the National Development and Reform Commission, and the Central Financial Office. These three are in charge of legislation, resource control, and strategic coordination, respectively.

This marks an upgrade in regulation to a full chain of finance + law enforcement, emphasizing that the virtual currency proposed in 924 does not have the status of legal tender, and related business activities (such as trading, exchanging, mining, and stablecoin issuance) are considered illegal financial activities and are completely prohibited. In short, this is definitely a big negative and panic-inducing policy for domestic cryptocurrency practitioners and traders. I remember when Trump was fully supporting the cryptocurrency market, many foreign media speculated that China would reopen its market. Now it seems they were really overthinking it; the cryptocurrency market is just a way for funds to escape and bypass foreign exchange controls, and domestically, it leads to a dead end. Moreover, there are reports that foreign exchange inspections have been upgraded again. Previously, personal overseas remittances of $10,000 were automatically reviewed by the system; now, it's $1,000 that must undergo scrutiny. The stablecoin trading volume in Yiwu has already reached $10 billion. So, if you are wholeheartedly treating crypto as a career, it’s best to go abroad. Currently, it's risky to stay in the domestic market; if nothing happens now, there is still the risk of accountability later. However, this wave of meetings has not had an immediate impact on the market because there have been too many crackdowns previously; those who were going to go overseas have already done so, and those who were going to withdraw from the market have also exited. Additionally, this meeting is only for discussion and not like the previous 924 which was issued in the form of a notice, meaning there is already a conclusion, thus it carries more weight. However, this meeting format does not guarantee that there will not be a summary notice released later, and when that happens, the market may panic again. The recent correction in the market might also be influenced by this, and on Monday, many will begin risk-averse operations.

Another important news that affects the coin price is
Bank of Japan Governor Kazuo Ueda stated that if the forecasts for economic activity and prices are realized as expected, 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 rate hike has been mentioned countless times before, and last year there was a jump that wiped out 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 unaware of the relationship between Japan's interest rate hike and the cryptocurrency market, which is actually quite easy to explain. Japan has always had a 0% or negative interest rate for a long time, which has led many smart institutions to borrow yen from Japanese banks to invest in higher-yielding products, such as dollars, U.S. bonds, U.S. stocks, gold, and cryptocurrencies, allocating different proportions based on risk levels. This means that Japan's low interest rates have actually provided liquidity to risk markets. Now, with the rate hike, these institutions' interest rate differentials will inevitably decrease, resulting in the selling of risk assets to repay yen loans. This is equivalent to draining liquidity from the market, so the negative impact is considerable. Assets like cryptocurrencies, which are greatly affected by liquidity, are bound to be the first choice to be sold off, making it a significant negative factor. Even the little black Arthur has stated that the main reason for this decline is the news of Japan's interest rate hike.

There’s also a little rumor saying that Trump has finalized the candidate for the Federal Reserve Chair, which is Hassett, and that Powell will announce his resignation at the emergency meeting on Monday night. Although Hassett himself has come out to refute the rumor about being appointed early, if Trump nominates him, he would be very willing. Currently, the probability of Hassett being elected on Polymarket has already reached 72%, making him a strong favorite. Theoretically, Hassett taking office would definitely be a positive for the market, but an early confirmation and Powell's early resignation would still bring a lot of uncertainty and impact to the market in the short term. After all, Powell's resignation would lead people to associate it with the independence of the Federal Reserve, which is also one of the reasons for the decline in cryptocurrency prices today. Additionally, a rate cut in December is basically stable, with the probability of a 25 basis point cut on Polymarket already reaching 89%, and the probability on CME reaching 87.6%. The market has basically priced this in, but there are just too many other negative factors.

Then there is a bearish event related to MicroStrategy.
Strategy CEO seems to be a bit softening and admitting defeat, as he had previously claimed that he would never sell Bitcoin, but over the weekend he said
Only when the company's stock price falls below its net asset value and it cannot obtain new funding will it consider selling Bitcoin. Currently, MicroStrategy's mnav is 1.13, which means that as long as the stock price continues to fall, MicroStrategy may have to sell coins. The market has already predicted that this will inevitably happen, just like how ETH faced on-chain liquidations every time it dropped before. Now it's DAT company's turn to face liquidation. Institutions holding coins with good financial conditions may use their capital advantage to target those DAT companies with high debt ratios and high financing costs, and then buy at low prices. Similarly, bmnr is even more dangerous; mstr claims to still be making over a billion, while bmnr has actually lost more than 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 now. Recently, ZEC, which was going against the trend, has also halved from its high. The entire privacy sector has seen the most significant pullback over the weekend, with ZEC dropping by 60%, DCR and DASH also pulling back over 20%. There are also a few projects affected due to malicious actions by market makers being investigated, such as $m , which have directly halved. Newly listed altcoins have also gradually halved. $sahara , as the first ICO on CB, couldn't hold up either. After selling, Arthur directly claimed that this project would drop by 99%. The founder responded in various ways showcasing technical prowess, but the market doesn't lie; it directly halved from the high. Another king-level new coin, $mon , is also on a continuous pullback and is currently close to the issue price. It seems that newly listed coins recently, regardless of how strong their background is or how low their valuation, once they are listed on a major exchange, if you hold for a week, you are likely to see a drop. This is a microcosm of this round of the market: no matter what coin it is, you must sell during peak attention periods; otherwise, the result you face is being trapped. The upcoming new coins are the same, whether it's MegaETH, Stable, or Base, Arc, Sea, Polymarket - as long as they dare to issue coins today, you must exit within 3 days of getting them. The only coins worth holding long-term are a few like BTC, ETH, and SOL; the rest have no moat.