On Wednesday, the cryptocurrency market experienced intense fluctuations, with the price of Bitcoin (BTC) plummeting sharply from $102K to below $95K, breaking through a key support level. Meanwhile, major coins such as Ethereum (ETH), XRP, and Solana (SOL) also suffered severe losses, with prices crashing.
The main reason behind this wave of sharp declines is the pressure from soaring U.S. Treasury yields and the blow from the latest report by the Institute for Supply Management (ISM). The report showed that the private sector Purchasing Managers' Index (PMI) surged to 54.1 in December, far exceeding November's 52.1, indicating that the pace of economic expansion is beyond expectations, further exacerbating market unease.
Major altcoins have also suffered, with most altcoins plummeting 5% to 10% in the past 24 hours. Meanwhile, meme coins are under heavy pressure, with Dogecoin (DOGE) and Shiba Inu (SHIB) both experiencing a drop of 8% to 10% during the same period. As a result, the total market capitalization of the global cryptocurrency market has shrunk by about 6%, currently falling to $3.38 trillion. However, despite the market downturn, investor sentiment remains unusually active, with trading volume surging by 27%, breaking through $162 billion and setting a new high!
Is there another surge coming?
Mainly looking at two points: (1) Trump's policies (2) Interest rate cut expectations
Trump's policies have not been easy to implement in the past few months, so just focus on interest rate cut expectations. If the expectation for a rate cut in March significantly declines, altcoins will drop; conversely, if the probability hovers around 40-60%, the market will be volatile. In a volatile market, one must be prepared for fluctuations; if decent profits are made, they should be taken, rather than holding out.
After some data was released last night, the probability of an interest rate cut in March dropped to four levels, while the probability for May is around five levels. Additionally, Bitcoin has rebounded for eight consecutive days, so a pullback is very normal; however, Bitcoin is still just in a state of fluctuation. Unless the probability of a rate cut in March falls below 20%, it is unlikely to approach 91,500 or even drop below it. Next, we will focus on the two sets of economic data on the 10th and 15th, as well as the speeches after the FOMC meeting on the 29th to judge how the market will move.
Investors need to be fully alert, buying low and selling high, and absolutely avoid cutting losses at low prices, only to chase higher when the prices rise. If you are holding mainstream value in spot positions, you can temporarily lie flat, or manage maximum drawdown risk. If you are dealing with small meme altcoins, then do not consider averaging down, as there will be a lot of data released this week, with various positive and negative news alternating, which can easily mislead you during the fluctuations. The best approach is to lie flat and wait for the washout phase to end. Currently, accumulate spot positions in batches and enter contracts on the right side.
