Original | Odaily Planet Daily (@OdailyChina)
Author | Asher (@Asher_0210)
This morning, the Federal Reserve announced a 25 basis point reduction in the benchmark policy rate but hinted that the number of rate cuts in 2025 may be lower than previously expected (fewer than four cuts predicted in September, and fewer than three cuts anticipated by the market before the meeting). Powell described this shift as a 'new phase' in monetary policy and emphasized that after a 100 basis point cut in 2024, interest rates are now clearly closer to a neutral position. Such a 'hawkish' signal caused a plunge in both the US stock and cryptocurrency markets.
OKX real-time data shows that as of today at 10:50 (all subsequent 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 $200, currently reported at $203.83, with a 24-hour decline of 6.94%;
Other mainstream 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, with a 24-hour decline of 17.5%, currently reported at $0.000184; PEPE fell below $0.000019, with a 24-hour decline of 16.3%, currently reported at $0.0000187;
In US stocks, all three major indices fell on the day, with the Dow Jones initially down 2.59%, setting a record for the longest single-day decline in 50 years (the 10th consecutive trading day of decline); the S&P 500 index closed down 2.95%, and the Nasdaq closed down 3.56%;
Affected by the overall market movement, the total market capitalization of cryptocurrencies has also dropped sharply. According to CoinGecko data, the current total market capitalization of cryptocurrencies has fallen below $2.6 trillion, with a 24-hour decline of 8%. The trading enthusiasm among crypto users has also decreased, with Alternative's fear and greed index today 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 totaling $853 million, with long liquidations at $752 million and short liquidations at $101 million. In terms of 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 profusely.' When asked about Bitcoin reserves, Powell stated, 'It is currently not allowed to hold Bitcoin and does not wish to change the law.' Is the policy bull market coming to an end, or are there other variables before Trump's official inauguration?
Below, Odaily Planet Daily will summarize institutional views and arguments regarding the market outlook.
What will the subsequent trend of Bitcoin be?
FalconX: Interest rate cut predictions may not have a long-term impact on the crypto market, and Bitcoin's correlation with major stock indices has decreased.
David Lawant, research director at crypto brokerage FalconX, stated, 'Although interest rate cut predictions are currently affecting prices, they may not have a long-term impact, as Bitcoin's correlation with major stock indices has decreased. A slowdown in the rate of cuts expected 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 of policy changes from the new government.'
Santiment: The drop in Bitcoin is not as significant as normal volatility compared to the S&P 500 index.
Analysts at blockchain analysis platform Santiment stated, 'Although the short-term price reaction of BTC is disappointing, the correlation of Bitcoin and many altcoins with the stock market has slightly weakened this month. During bull markets, when cryptocurrencies have little or no correlation with stocks, they tend to thrive. Considering that BTC is temporarily holding above $100,000, and the drop compared to the S&P 500 index is not as significant as normal volatility, this could 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, head of research at Grayscale, stated that after Fed Chair Powell's speech, Bitcoin's price plummeted, indicating that investors may be placing too much emphasis on the theoretical possibility of a Bitcoin 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 strengthening dollar are the biggest risks facing BTC.
Andre Dragosch, head of European research at Bitwise, believes: 'The biggest problem for the Fed right now is that despite rate cuts, the financial environment remains tight. Since September, yields on long-term bonds and mortgage rates have been rising, along with a strengthening dollar, which also indicates a tightening financial environment. The continuous appreciation of the dollar also poses macro risks to Bitcoin, as dollar appreciation is often associated with a contraction in the global money supply, which tends to be unfavorable for Bitcoin and other crypto assets. In fact, the Fed's net liquidity continues to decrease. In my opinion, tightening liquidity and a strengthening dollar are also the biggest risks facing BTC... On the other hand, BTC's on-chain factors continue to be very favorable, especially the ongoing decrease in exchange balances, which supports the assumption 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 crypto fund Split Capital, stated: 'The global market expects the Fed's dovish stance to weaken in 2025. As a result, crypto event traders and market makers are lowering their risk.' The Federal Reserve officials cut the benchmark rate for the third consecutive time on Wednesday but limited the expected number of rate cuts in 2025. Lower rates usually increase demand for most high-risk assets (such as cryptocurrencies).
Summary
This morning, after the Federal Reserve sent out a 'hawkish' signal, market expectations for Bitcoin began to diverge, especially as the previously widespread bullish sentiment weakened before breaking the $100,000 mark. Currently, optimists believe that Bitcoin's correlation with the traditional stock market has significantly decreased, and Trump has repeatedly mentioned establishing a strategic Bitcoin reserve, which still provides support for 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.
