Original | Odaily Planet Daily (@OdailyChina)
This morning, the Federal Reserve announced a 25 basis point cut to the benchmark policy rate but hinted that the number of rate cuts in 2025 may be lower than previously expected (fewer than the four cuts predicted in September and fewer than the three cuts anticipated by the market before the meeting). Powell described this shift as a "new phase" of monetary policy and emphasized that after a 100 basis point cut in 2024, rates are now significantly closer to a neutral stance. Such a "hawkish" signal caused both the US stock market and the cryptocurrency market to plunge.
According to real-time data from OKX, as of around 10:50 today (all references are based on this time), BTC briefly fell below $99,000, currently reported at $99,600, with a 24-hour decline of 5.38%, dropping below $100,000;
Besides BTC, ETH briefly fell below $3,600, currently reported at $3,630, with a 24-hour decline of 6.03%; SOL briefly fell below the $200 mark, currently reported at $203.83, with a 24-hour decline of 6.94%;
Other major altcoins also experienced significant declines. Among the top 100 cryptocurrencies by market capitalization, the Meme sector saw the largest drop, with WIF falling below $2.50, a 24-hour decline of 17.6%, currently reported at $2.24; FLOKI fell below $0.000185, a 24-hour decline of 17.5%, currently reported at $0.000184; PEPE fell below $0.000019, a 24-hour decline of 16.3%, currently reported at $0.0000187;
In the US stock market, all three major indices closed down, with the Dow Jones initially down 2.59%, marking the longest single-day losing streak in 50 years (down for the 10th consecutive trading day); the S&P 500 index closed down 2.95%, and the Nasdaq closed down 3.56%;
Affected by the overall market downturn, the total market capitalization of cryptocurrencies also plummeted. According to CoinGecko, the current total market capitalization of cryptocurrencies has fallen below $2.6 trillion, down 8% in 24 hours. The trading enthusiasm among cryptocurrency users has also declined, with today's Fear and Greed Index reported at 75, shifting from extreme greed to greed.
In terms of derivatives trading, Coinglass data shows that in the past 24 hours, the entire network experienced liquidations of $853 million, with long positions liquidated at $752 million and short positions at $101 million. In terms of specific cryptocurrencies, BTC saw liquidations of $157 million, and ETH saw liquidations of $135 million.
Bitcoin fell below $100,000 for the first time this week, and altcoins are also "bleeding," and when asked about Bitcoin reserves, Powell stated, "Currently, it is not allowed to hold Bitcoin, nor do I wish to change the law." Is the policy bull market coming to an end, or are there other variable factors before Trump's official inauguration?
Below, Odaily Planet Daily will summarize the views and arguments of institutions regarding the future market trends.
What will be the future trend of Bitcoin?
FalconX: Rate cut predictions may not have a long-term impact on the crypto market, correlation between Bitcoin and major stock indices has decreased
David Lawant, research director at cryptocurrency brokerage FalconX, stated, "Although rate cut predictions are currently affecting prices, they may not have a long-term impact, as the correlation between Bitcoin and major stock indices has decreased. The expected slowdown in rate cuts in 2025 is not entirely surprising, but it has put some pressure on risk assets, including cryptocurrencies. While macro factors traditionally influence cryptocurrency price trends, industry-specific factors may dominate in the coming weeks and months, especially in the context of market expectations for policy changes from the new government."
Santiment: Compared to the S&P 500 index, Bitcoin's decline is not as significant as normal fluctuations
Analysts at blockchain analytics platform Santiment stated, "Although BTC's short-term price reaction is disappointing, the correlation between Bitcoin and many altcoins with the stock market has slightly weakened this month. During bull markets, cryptocurrencies thrive when their correlation with stocks is low or nonexistent. Considering that BTC is temporarily holding above $100,000 and its decline is not as significant compared to the S&P 500 index, this can actually be interpreted as a strong signal once the dust settles in the next 24 to 48 hours."
Grayscale Research: Sovereign wealth funds in Asia and the Middle East are more likely to be the next driving force
Zach Pandl, research director at Grayscale, stated: After Powell's speech, Bitcoin's price plummeted, indicating that investors may be overemphasizing the theoretical possibility of Bitcoin as a strategic reserve. Grayscale Research expects more nation-states to adopt Bitcoin, but the next step is more likely to come from sovereign wealth funds in Asia or the Middle East, which already manage highly diversified asset pools.
Bitwise: Tightening liquidity and a strong dollar are the biggest risks facing BTC
Andre Dragosch, head of research at Bitwise Europe, believes: "The biggest trouble for the Federal Reserve right now is that despite the rate cuts, the financial environment is still tightening. Since September, long-term bond yields and mortgage rates have been rising, and the dollar has appreciated, which also indicates a tightening financial environment. The continued appreciation of the dollar poses macro risks for Bitcoin, as the dollar's strength is also related to the contraction of the global money supply, which is often detrimental to Bitcoin and other crypto assets. In fact, the Federal Reserve's net liquidity continues to decrease. In my view, tightening liquidity and a strong dollar are also the biggest risks facing BTC… On the other hand, BTC's on-chain factors remain very favorable, especially the continued decline in exchange balances, which supports the hypothesis of a continuing supply gap for BTC."
Founder of Split Capital: Expect the Fed's dovish stance to weaken in 2025
Zaheer Ebtikar, founder of the crypto fund Split Capital, stated: "The global market expects the Fed's dovish stance to weaken in 2025. Therefore, crypto event traders and market makers are reducing risk." Federal Reserve officials cut the benchmark rate for the third consecutive time on Wednesday but controlled the expected number of rate cuts in 2025. Lower rates typically increase demand for most high-risk assets, such as cryptocurrencies.
Summary
This morning, after the Federal Reserve released a "hawkish" signal, market expectations for Bitcoin began to diverge, especially as the overall bullish sentiment before breaking the $100,000 mark weakened. Currently, optimists believe that the correlation between Bitcoin and traditional stock markets has significantly decreased, and Trump's repeated mentions of establishing a strategic Bitcoin reserve still support Bitcoin's future prospects.
However, changes in the macroeconomic environment, such as the appreciation of the dollar and tightening liquidity, may exert some pressure on Bitcoin's price in the short term.
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