The information, opinions and judgments on markets, projects, currencies, etc. mentioned in this report are for reference only and do not constitute any investment advice.
This week, BTC opened at $104,445.15 and closed at $95,087.75. On December 17, it hit a record high of $10,838.88. In the end, this week recorded a drop of 8.96% and an amplitude of 15.58%. The volume increased slightly, but it was basically at the same level as the previous two weeks.
This week is the first weekly correction since the beginning of November after BTC rose 38% in a single month. The core factor is still the profit takers. In this cycle, whenever the profit rate of short-term investors reaches more than 30%, the probability of a correction increases rapidly until their selling profit rate decreases or the cost of continued purchase is too high, and the market will begin to evolve to the next stage.
At the same time, external changes also supported the adjustment, which is the main force supporting the rise in BTC adoption rate in this round: the Federal Reserve's interest rate cuts, the Trump effect, and MicroStrategy's BTC purchases have all gone through the initial strong phase and entered a period of rest. Additionally, factors like the Christmas holiday, which significantly impact BTC ETFs, make the adjustment of BTC a reasonable outcome.
It should be noted that the above factors are not short-term forces; in the long run, they will contribute to the long-term development of BTC. Taking MicroStrategy as an example, it will officially enter the NASDAQ 100 index on December 23, which will open the door for mainstream U.S. funds to passively allocate BTC.
In the past week, capital inflows have shown a noticeable slowdown, which may continue for 1-2 months. Correspondingly, the scale of sell-offs by both long-term and short-term investors has also begun to slow down significantly, returning to levels before this round of upward movement. Under the balance of both, the probability of the market being in a volatile situation increases.
During this period, if the capital situation maintains a relatively net inflow state and the cost for short-term investors further rises to above $90,000, the space for the next wave of upward momentum will further open.
The relative support level for this round of adjustment may be at $85,000—this is the cost line for short-term investors, and this cost line is currently in a moderate upward trend.
Macroeconomic and financial data
On December 18, the Federal Reserve lowered the target range for the federal funds rate for the third time by 25 basis points, to between 4.25% and 4.50%. Unlike this interest rate cut, which was widely anticipated by the market, Fed Chairman Powell gave a more hawkish speech than expected.
Powell clearly stated that the timeline for controlling inflation is not as expected, and various economic data in the U.S. is strong. Coupled with the prediction of the impact of Trump's policies after he took office, the Federal Reserve is very cautious about the pace of interest rate cuts next year. The market interprets this as a clear statement on slowing interest rate cuts in 2025, with expectations of reducing cuts from more than three times next year to fewer than two times.
Since reaching a new high at the beginning of December, the Dow Jones has fallen for three consecutive weeks, declining 2.25% this week; the NASDAQ, after four consecutive weeks of rising to new highs, recorded a weekly decline of 1.78% for the first time. The Russell 2000, which is more strongly correlated with BTC, fell 4.5% this week.
The dollar index rose 1.23% to 108.26 on the day of the interest rate cut, followed by a pullback to 107.71 in the following days. London spot gold remained stable above 2600, with prices steady.
In terms of capital and supply analysis, funds continued to flow in this week, amounting to $1.202 billion, significantly slowing compared to last week's $6.7 billion. Among them, there was a net inflow for four consecutive days starting from December 19, while the BTC ETF experienced a net outflow of $670 million on that day, which overall diluted the inflow from the previous few days.
On the supply side, in the past month, as BTC prices rapidly rose, the average daily amount of BTC transferred to exchanges by long-term and short-term investors increased from 30,000 coins per day to 40,000-45,000 coins per day. In the past week, this number gradually fell back to the level of 30,000 coins.
The BTC inventory on exchanges continues to decline to 2.7843 million coins, a decrease of 16,000 coins from last week. This indicates that the trend of accumulating chips is still ongoing.
The cost line for short-term investors is $85,700, with profits decreasing from 33% to 13%.
In terms of leverage, borrowing rates have decreased from a peak of 40% two weeks ago to around 10%, remaining stable. The funding rate for contracts has also dropped from a peak of 99% to around 9%. Both indicate a rapid decline in market leverage.
Ecological analysis
The number of new BTC addresses and active addresses has remained stable, but the scale of value transfer has significantly declined.
The Ethereum ecosystem has seen a slight increase in new addresses and active addresses. Other active platforms like Solana, Base, and Polygon maintain robust vitality, with significant increases in new addresses, active addresses, and transactions.
Cycle indicators
The EMC BTC Cycle Metrics indicator is at 0.75, indicating that the market is in an upward phase.
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