Bitcoin hit a low of $96,176 this morning. Former senior economist of the Obama administration and current Harvard professor Jason Furman pointed out that if the labor market remains healthy this year, the Fed may only make one interest rate cut.
The U.S. Department of Labor released the 'Job Openings and Labor Turnover Survey' on the 7th, showing that job openings rose by 259,000 from the revised value of 7.839 million at the end of November 2024 to 8.098 million, a new high in half a year.
Moreover, the ISM Non-Manufacturing Index in the U.S. rose from 52.1 in November to 54.1 in December last year, surpassing economists' expectations and stabilizing above the 50 mark, indicating ongoing economic expansion, leading to a surge in U.S. bond yields towards 5%, with all four major U.S. indexes declining, and Nvidia closing down 6.2%, dragging tech stocks into the red.
The Dow Jones Industrial Average fell by 0.42% (178.2 points), closing at 42,528.36 points.
The Nasdaq index fell by 1.89% (375.3 points), closing at 19,489.68 points.
The S&P 500 index fell by 1.11% (66.35 points), closing at 5,909.03 points.
The Philadelphia Semiconductor Index fell by 1.84% (97.9 points), closing at 5,212.24 points.
Bitcoin plunged by $96,000.
Bitcoin also experienced significant fluctuations in the context of the decline of U.S. stocks, plunging after the U.S. stock market opened last night, hitting a low of $96,176 around four in the morning. Before this report, it was at $97,128, down 4.72% in nearly 24 hours; Ethereum's decline was even more severe, currently reported at $4,703, down 7.44% in nearly 24 hours.
Former Obama administration economist: There may only be one rate cut this year.
In this context, at the annual discussion meeting of the American Economic Association held in San Francisco last week, several economists anticipated that the Fed's position might have become more hawkish after entering the new year, and this year's rate cut might even only happen once.
Among many economists, former senior economist of the Obama administration (Deputy Director of the National Economic Council) and current Harvard professor Jason Furman pointed out that if the labor market remains healthy this year, the Fed may only make one interest rate cut, as the Federal Reserve has entered a new phase where it needs reasons to support rate cuts.
Last year, the Fed thought everything was fine, so they took a nonchalant attitude towards interest rate cuts. But if the labor market remains healthy, considering concerns about inflation prospects and whether the federal benchmark interest rate is already at a level that slows demand, then only one 25 basis point cut this year is the most likely scenario.
On the other hand, Furman also anticipated a worse scenario, where rate hikes could also occur in 2025.
If the inflation rate measured by the Fed's preferred PCE index rises above 3% by mid-year, the Federal Reserve may consider changing its course.
U.S. economic growth will slow, consumer pressure will increase, and Trump's plans may not change much; many things are moving in a worse direction.
The CME FedWatch tool shows that traders expect the likelihood of maintaining interest rates unchanged at this month's meeting has exceeded 95%.
Bitwise: Bitcoin will start to outperform traditional assets this year.
Due to the limited expectations of Fed rate cuts and the potential economic policies of Trump, recent traditional assets such as U.S. stocks, bonds, and gold have been affected to varying degrees. However, asset management firm Bitwise released a report yesterday (7) indicating that Bitcoin is still supported by on-chain data in the current market environment, and it still expects Bitcoin to reach $200,000 by the end of this year, predicting that by 2029, Bitcoin will officially break through $1 million.
In December 2024, the crypto market faces resistance such as profit withdrawal and reduced institutional positions, while the appreciation of the dollar and Fed policies have also led to a slight tightening of the financial environment, but Bitcoin still receives support from on-chain data.
Despite the short-term risks that still exist, long-term bullish factors such as the Bitcoin halving and potential Bitcoin reserve strategies support the expectation that Bitcoin will continue to rise in the future, with a forecast that its performance will outperform traditional assets starting in 2025.
