Woken up by Kitty @Cato_CryptoM's message, I found out how sharply the market has dropped. When I went to sleep, the US stock market hadn't opened yet, and at that time, the price of $BTC was almost back to $116,000. I've been focusing on strengthening my sleep due to feeling unwell lately, so I woke up feeling dazed. Kitty told me it was due to the market's pessimistic expectations regarding interest rate cuts in September.

I checked the detailed timeline and saw that the drop started at 9:30 PM Beijing time, which coincided with the US stock market opening. Within an hour, there was a significant drop in volume, and I also looked at the US stock market, noticing that the Nasdaq and S&P started to drop at the same time.

This indicates that this Bitcoin drop is different from the previous two, and today the decline in the US stock market is increasing, with both crypto and stocks reacting, so it’s definitely not just a standalone event in the crypto market.

The Nasdaq started to drop right at the opening, while the S&P rose for a while before starting to decline significantly. I also saw that gold was dropping, and the yields on long-term US Treasuries were falling as well. This should not only be about the expectations for interest rate cuts in September; it’s likely compounded by concerns about an economic downturn.

This has led to a risk-off sentiment in the market, with more funds flowing into risk-free bond markets.

I looked around the market and didn’t see any obvious panic on the information front. This kind of drop is quite troublesome. If there were clear negative news, like the previous whale sell-off, or statements from the Federal Reserve, or trade war issues, it would be easier to make a judgment. But when there’s nothing, it’s the hardest to assess.

Unjustified rises and falls are both problematic. At least from the current market information, cryptocurrencies are down, US stocks are down, gold is down, US Treasury yields are down, and the dollar index is up, all indicating that the market's expectations for interest rate cuts in September are increasing. However, the reason for this increase is the concern about a potential economic slowdown or recession.

This situation resembles the early patterns of trading during a recession. Of course, it’s very likely that we haven’t entered this stage yet, as there’s no clear data supporting an economic downturn. But the market is certainly ahead of expectations. So this might bring us back to the game between Trump regarding the economy and monetary policy.

It’s indeed difficult to determine whether the market will increase panic or if it has already anticipated the current economic situation. However, it is certain that the Jackson Hole annual meeting should be the first point of market contention, where Powell may release expectations regarding interest rate cuts in September and the outlook for the US economy.

I will hold onto my long position for now. Kitty suggested that I increase some margin to avoid losses from $ETH filling the gap. Currently, my long position is showing a floating loss of 50%.

This article is sponsored by #Bitget ｜ @Bitget_zh

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