The Federal Reserve may continue to cut interest rates this month.
Written by: 1912212.eth, Foresight News
Since the liquidation of over $1.7 billion in the crypto market on December 10, a large amount of leverage has been forcibly closed, and market health has returned to normal. Today, Bitcoin surged again above $100,000, with a 24-hour increase of nearly 5%. ETH rose above $3,900, with a 24-hour increase of over 7%. Ethereum's strong performance has led many altcoins to rally, with the public chain sector seeing SOL rise over 6%, SUI increasing over 30% to reach a new all-time high, and SEI rising over 14%. In the AI sector, WLD increased over 16%, IO rose over 23%, and ARKM gained over 12%.
The Ethereum ecosystem, including DeFi, re-staking, L2, and stablecoins, also experienced a broad increase, with EIGEN rising over 22% and ENA increasing over 21% in 24 hours. OP and ARB also saw increases of around 10%.
In terms of contract data, according to Coinglass, the total liquidation across the network in 24 hours was $228 million, with short positions accounting for $154 million.
The market is experiencing a broad increase, shifting from skepticism to optimism. What has happened in the market?
Bitcoin and Ethereum Spot ETF Data Continue to See Significant Net Inflows
Bitcoin spot ETF data is one of the important reference indicators for observing the inflow of off-exchange funds. Since November, there have been a total of 7 instances of net outflows, but the amounts have been relatively small.
In contrast, the number of days with net inflows far exceeds those with net outflows. Additionally, since November 27, Bitcoin spot ETF data has recorded 9 consecutive days of net inflows, with funds continuously pouring in. Currently, the total net inflow for Bitcoin spot ETFs has reached $34.45 billion.
As for Ethereum spot ETFs, they have transitioned from initial unpopularity and a prolonged period of stagnation to now experiencing continuous significant net inflows.
Since November 22, Ethereum spot ETFs have achieved 12 consecutive days of net inflows, with three single-day net inflows exceeding $300 million. As of now, the total net inflow for Ethereum spot ETFs has reached $1.89 billion, with a total daily trading volume exceeding $470 million.
The continuous inflow of off-exchange funds has played a significant role in driving up the price of Ethereum.
CPI Meets Expectations, Federal Reserve Will Cut Rates Again This Month
Last night around 9 PM, the U.S. November seasonally adjusted CPI year-on-year rebounded further, rising for the second consecutive month to 2.7%, in line with market expectations, reaching a four-month high.
As one of the important data points for Federal Reserve decision-making, despite a significant increase, it is unlikely to prevent the Fed from cutting rates next week.
In recent months, the process of bringing inflation down to the Fed's 2% target has effectively stalled. However, the Fed is now more focused on the labor market. After being severely disrupted by strikes and hurricanes in October, job growth accelerated in November, but the unemployment rate rose to 4.2% after remaining at 4.1% for two consecutive months.
Goldman Sachs analyst Whitney Watson stated that today's CPI data has cleared the way for a rate cut next week. Following the data release, the Fed will enter a "quiet period," and they remain confident in the anti-inflation process, stating, "We believe that in the new year, the Fed will continue to gradually ease monetary policy."
Yesterday, traders increased their bets on the Fed cutting rates in December, with swap market bets on the likelihood of a rate cut rising from 86.1% before the data release to 96.4%.
If the Fed cuts rates again this month, it will undoubtedly increase market liquidity, benefiting the crypto market.
Trump's Crypto Project WLFI Increases Holdings in Ethereum and Eco DeFi Projects
Trump is about to take office as the new U.S. president, and the related crypto project WLFI is attracting significant market attention. Trump's second son expressed confidence at the Bitcoin Middle East and North Africa Conference, stating, "BTC will reach $1 million; it is a better investment than real estate, and those who embrace cryptocurrency early will succeed."
Just a day later, WLFI took "practical action." Lookonchain monitoring shows that within the past 10 hours, its wallet address spent $10 million to purchase 2,631 ETH at a cost of $3,801, acquired 41,335 LINK worth $1 million at an average cost of $24.2, and purchased $1 million worth of AAVE at an average cost of $297.8.
As of now, LINK is priced at $26.7, with a 24-hour increase of over 20%, and AAVE is priced at $332, with a 24-hour increase of over 22%.
With Trump's significant influence, WLFI's funding dynamics will likely receive greater attention and impact in the future.
Cryptocurrency Fund Ads Appear on Alipay Fund Homepage
Today, a cryptocurrency fund promotion ad appeared on the homepage of Alipay Fund in mainland China, sparking considerable discussion in the community. Some users received promotional ads for cryptocurrency funds on the homepage, stating, "Global investment, cryptocurrency soaring, invest from 10 yuan, get on board immediately."
Upon verification, the fund is Huabao Overseas Technology C (QDII-FOF-LOF), a compliant investment model for overseas assets, indirectly holding Coinbase stock and ARK Invest Bitcoin spot ETF. Currently, there is a daily purchase limit of 1,000 yuan per person.
As is well known, mainland China's policies have historically imposed strict regulations on cryptocurrencies, prohibiting any exchange trading and token promotions. The appearance of a cryptocurrency promotion fund on the Alipay homepage inevitably leads the market to speculate that mainland China may open up some investment channels in the crypto market in the future.
Future Market Trends
Weiss Crypto analyst Juan M Villaverde stated in an analysis of the recent sharp decline that $100,000 is a key level for Bitcoin. If Bitcoin can break through and stabilize above this level, the current altcoin rebound will not end prematurely. However, if Bitcoin cannot hold above $100,000, the outcome for altcoins may likely revert to the starting point.
Matrixport emphasized that Ethereum's price is expected to rise significantly in 2025. The liquidity of Ethereum spot ETFs may reflect a reallocation or expansion of investment directions, coinciding with the new fiscal year that U.S. mutual funds typically start on December 1, and also reflecting market optimism for 2025. If this demand continues, Ethereum's price in 2025 may rise significantly.
Bitwise is quite optimistic and predicts that Bitcoin, Ethereum, and Solana will reach new all-time highs in 2025, with target prices as follows:
· Bitcoin: $200,000
· Ethereum: $7,000
· Solana: $750
The above analysis and predictions are not investment advice. The market is highly volatile during bull market cycles, and investors should pay attention to "risk control."
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