Author: Talking Beyond Words
Beijing time today (December 19), the United States announced the interest rate meeting for December, which seems to have a significant impact on the market. We mainly focused on two points:
The positive aspect is that the Federal Reserve will lower interest rates by another 25 basis points, i.e., down to 4.25–4.50%.
The negative aspect is that Powell suggested that BTC as a national reserve is not feasible.
Next, let's briefly analyze these two aspects:
First, on the interest rate cut aspect.
In previous articles, interest rate expectations have also been a major focus for us because, theoretically and experientially, the Federal Reserve lowering interest rates means that investors may allocate more funds to high-risk markets (like the crypto market). It is not an exaggeration to say that the major bull market in 2021 was also largely compounded by the rate cuts at that time.
If we compare interest rate cuts with Bitcoin prices, we can also clearly see that over time, the significant changes in interest rate expectations increasingly align with key moments in Bitcoin price trends. A major reason for this shift may be the increasing adoption and holding of Bitcoin by traditional market investors, while more and more investors have begun to regard interest rates and other macroeconomic indicators as important reference factors for investing in Bitcoin. As shown in the figure below.
Next is Powell's suggestion.
At the FOMC meeting, when a reporter asked: Do you see any value or benefits in the US government building a reserve of bitcoin?
Powell said: We're not allowed to own bitcoin, and we're not looking for a law change.
As Powell's remarks emerged, it seems the market was also shaken, causing Bitcoin to briefly drop to around 99,000 dollars. In addition, the three major U.S. stock indexes also fell across the board due to this impact. It is not an exaggeration to say that today the Federal Reserve seems to have directly crashed the market.
However, I did a simple check, and there is nothing wrong with Powell's remarks themselves, because in the United States, the Federal Reserve is indeed an independent institution, not directly controlled by the president or Congress. On the other hand, Congress has the power to amend the rules and laws governing the operations of the Federal Reserve, and whether this will happen depends on whether Trump officially takes office and whether his team chooses to be the change-makers. However, from Trump's publicly expressed personal views, he seems quite willing to incorporate Bitcoin into the United States' strategic reserves.
Through a simple analysis of the above two aspects, we can think that Powell's statements at today's meeting of the Federal Reserve did have some impact on the short-term market, but from a longer-term perspective, it does not seem impossible for Bitcoin to become a strategic reserve in the United States.
From a more macro perspective, the dominant position of the dollar seems to be losing ground year by year, while America's debt continues to soar, with the total debt now approaching 36 trillion dollars. As shown in the figure below.
Therefore, many analysts currently believe that incorporating Bitcoin into strategic reserves and using dollar BTC for a certain degree of hedging can continue to strengthen America's position in the digital economy.
Of course, there are other analysts who believe that Bitcoin will threaten the existing dollar hegemony, and incorporating BTC into strategic reserves would disrupt the status quo of the dollar, making such a scenario impossible.
As for whether you agree with these two viewpoints or which one you resonate with more, it actually doesn't matter to others; just remember one thing: the future of Bitcoin is unstoppable.
However, today's Federal Reserve meeting has indeed caused a lot of panic, and Powell's remarks have also led to a new round of liquidation in the entire crypto market. According to on-chain data, in just the past 12 hours, the liquidation scale in the crypto market has exceeded 680 million dollars, with about 600 million dollars in long positions liquidated. As shown in the figure below.
At the same time, many people also seem to be engaging in panic selling, especially among altcoins, where many altcoins have seen double-digit declines in a single day. As shown in the figure below.
As for the upcoming short-term market trends, I see that some analysts are expressing a relatively pessimistic view, believing that Bitcoin will soon drop below 60,000 dollars. However, personally, I believe the probability of dropping below 90,000 this month is low, but I will not stop anyone's actions. Although I always remind everyone to have patience and stay calm, I also respect everyone's thoughts and decisions.
Just as we mentioned in our previous article (December 17): the market is often like this, when prices rise, various potential positive news and analyses based on this will concentrate in people's eyes. And when prices fall, various media will immediately create negative news to match market sentiment.
In the next few days, we will likely continue to see reports or news through some media, social platforms, or communities: such as certain institutions pausing purchases or planning to sell Bitcoin, certain whales have begun selling Bitcoin, or certain experts successfully avoided the peak before this drop...
This morning, I happened to see a partner in the group share a rather interesting picture, and I will share it directly with everyone here for some fun.
