Orange Evening Interpretation 12.1

This weekend there were indeed too many negative factors. First, a meeting was held by 13 domestic ministries to jointly crack down on virtual currency speculation. This wave has expanded in scale compared to the 7 ministries in 2017 and the 10 ministries in 2021. Compared to the meeting on September 24, three more departments have been added, namely the Ministry of Justice, the National Development and Reform Commission, and the Central Financial Office. These three are responsible for legislation, resource control, and strategic coordination respectively.
This marks an upgrade of the regulatory framework to a full-chain approach involving finance and 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, issuing stablecoins) are considered illegal financial activities and are strictly prohibited. In summary, this is certainly a significant negative and panic-inducing policy for domestic cryptocurrency practitioners and traders. I remember when Trump fully supported the cryptocurrency market, many foreign media speculated that China would reopen its market, but it seems they were overly optimistic. The cryptocurrency market is just a way for capital to escape and bypass foreign exchange controls; domestically, there is only a dead end. Moreover, there are reports that foreign exchange inspections have been upgraded again. Previously, personal overseas remittances of $10,000 would trigger automatic inspections, and now it is $1,000 that must be inspected. The trading volume of stablecoins in Yiwu has reached billions of dollars. Therefore, if you are wholeheartedly treating cryptocurrency as a career, it is best to go abroad, as there is now a risk of reckoning later if nothing happens domestically. However, this round of meetings did not have an immediate impact on the market, as there have been too many crackdowns previously; those who needed to go overseas have already done so, and those who needed to exit the industry have also exited. Additionally, this round is just a meeting for discussion, rather than a notification like 924, which means a result has already been reached, thus holding greater power. However, this meeting format does not rule out the possibility of a summary notification being released later, which could cause another wave of panic in the market. The recent market correction might also be influenced by this aspect, and risk-averse operations have started as work resumes on Monday.
Another more important news that affects the coin price is
The Governor of the Bank of Japan, 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 interest rate hike has already been mentioned countless times; last year there was a jump that led to the liquidation of ETH, causing the market to crash directly. This time, the central bank governor's hawkish stance has caused 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 long maintained a 0% or negative interest rate, which has led many smart institutions to borrow yen from Japanese banks to invest in products with higher interest rates, such as the US dollar, US Treasuries, US stocks, gold, and cryptocurrencies, allocating different proportions based on risk levels. In other words, Japan's low interest rates have effectively provided liquidity to risk markets. Now, with interest rates rising, it will inevitably lower the interest rate differential for these institutions, leading to the selling of risk assets and repaying yen loans. This is equivalent to draining liquidity from the market, so the negative impact is considerable. Cryptocurrencies, which are significantly affected by liquidity, will inevitably be the first to be sold off; thus, this is a major negative factor. Even little Arthur has mentioned in his post that the main reason for this decline is the news of Japan's interest rate hike.
Then there is a rumor that Trump has finalized the candidate for the Federal Reserve Chairman, which is Hassett, and that Powell will announce his resignation at the emergency meeting on Monday night. Although Hassett himself has come out to debunk the rumor that he will be elected early, if Trump nominates him, he is very willing. Currently, the probability of Hassett being elected on Polymarket has reached 72%, making him a strong contender. Theoretically, Hassett taking office would definitely be a positive for the market, but early confirmation and Powell stepping down could lead to significant uncertainty and shocks in the short term, as Powell's resignation may raise concerns about the independence of the Federal Reserve. This is also one of the reasons for today's drop in cryptocurrency prices. Additionally, a rate cut in December is basically certain, with the probability of a 25 basis point cut on Polymarket reaching 89%, and 87.6% on CME. The market has basically priced this in; however, there are too many other negative factors.
Then there is another bearish event which is MicroStrategy.
Strategy CEO seems to be somewhat backing down, having previously claimed that they would never sell Bitcoin, but over the weekend said
Only when the company's stock price falls below its net asset value and it cannot obtain new funds will it consider selling Bitcoin. Currently, MicroStrategy's mNAV is 1.13, which means that if the stock price continues to fall, MicroStrategy may have to sell its coins. The market has already predicted that this will inevitably happen, just like how ETH has been liquidated on-chain every time it falls. Now it's time for DAT company to be liquidated. Institutions holding coins with good financial conditions may take advantage of their capital 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 is still claiming to make over a billion, while BMNR has actually lost more than 4 billion. If the market continues to liquidate these two big players, the coin price will continue to drop.
On the altcoin front, the entire market has cooled down. Recently, the counter-trend zec has also been halved at its peak. The entire privacy sector has experienced the most significant pullback over the weekend, with zec dropping by 60%, and dcr and dash also retracting by over 20%. Additionally, there are a few projects affected due to market makers' malpractices being investigated, such as $m , which have also been directly halved. New altcoins that have been launched have also gradually halved. $sahara , as the first ICO from cb, couldn't hold up either. After the sell-off by Arthur, it directly led to claims that this project would drop by 99%. The founder responded with various technical prowess claims, but the market doesn’t lie; the peak has been halved directly. Another king-level new coin, $mon , is also on a downward trend, currently approaching its break-even price. It seems that regardless of how strong the background of newly listed coins is or how low their valuation may be, once they are listed on a major exchange, holding them for a week is highly likely to result in losses. This is a reflection of this round of the market; no matter what coin it is, one must sell at the peak of attention, otherwise, the result you face is being trapped. The same goes for upcoming new coins; whether it's megaeth, stable, base, arc, sea, or polymarket, as long as they dare to issue coins today, one must exit within 3 days of acquiring them. The only coins worth holding in the long term are a few like btc, eth, and sol; others have no protective moat.