Original | Odaily Planet Daily
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In the past week, the cryptocurrency market has continued to decline. Yesterday, after the news that the U.S. Department of Justice was allowed to sell $6.5 billion in seized darknet Silk Road Bitcoins, Bitcoin fell from $94,000 to below $92,000, exacerbating market panic. Many officials from the Federal Reserve have also stated that they will adjust interest rate policy, suggesting that they will slow down the pace of interest rate cuts in 2025 and implement tightening policies. At the same time, under the influence of the Los Angeles wildfires, some analysts pointed out that many wealthy people sold crypto assets to rebuild their post-disaster lives. Various market performances have made investors worried about the future of cryptocurrency prices.
Additionally, Russia has also begun selling 1,032 bitcoins seized in the Infraud hacker organization case. Under multiple influences, today's cryptocurrency market has once again declined.
OKX real-time market data shows that as of the time of writing, BTC has fallen to a low of $92,000, currently reported at $93,760, with a 24-hour drop of 0.45%;
Apart from BTC, competitive coins led by ETH are also facing significant declines, with ETH dropping below $3,200 and currently reported at $3,258, with a 24-hour drop of 1.94%; SOL has dropped below $190, currently reported at $189.57, with a 24-hour drop of 1.4%;
On-chain markets are also not escaping this difficulty, with the previously popular AI Agent sector experiencing a collective major correction. According to GMGN data, AI Agent tokens continue to decline, among which: ai16z has a 24-hour drop of 23.05%, currently valued at $1.68 billion; FARTCOININ has a 24-hour drop of 31.09%, currently valued at $919 million; ZEREBRO has a 24-hour drop of 41.92%, currently valued at $329 million.
Affected by the overall market uptrend, the total market value of cryptocurrencies has also rapidly declined. CoinGecko data shows that the total cryptocurrency market value has dropped to $3.4 trillion, down 3.4% in 24 hours. The trading enthusiasm among cryptocurrency users has also decreased, with the Alternative Panic and Greed Index reporting 50 today, shifting from greed to neutral.
In terms of derivative trading, Coinglass data shows that in the past 24 hours, the total liquidations across the network amounted to $375 million, with long positions liquidated at $260 million and short positions liquidated at $115 million. By currency, among them, BTC liquidations totaled $99.74 million, and ETH liquidations totaled $69.68 million.
In this article, Odaily Planet Daily analyzes the reasons for the recent market decline and future trends.
Multiple factors have led to the market decline.
The post-disaster reconstruction caused by the Los Angeles wildfires has made cryptocurrency the fastest way to liquidate assets.
Recently, the devastation of wildfires in Los Angeles has not only caused significant property losses for local residents but has also had a significant impact on the cryptocurrency market. According to data from Coinbase, after the outbreak of the wildfires, bitcoin trading volume from Los Angeles and surrounding areas surged, especially large transactions increased significantly, reflecting the urgent need for some affected families to liquidate crypto assets to meet post-disaster reconstruction funding needs.
According to local real estate market analysts, many wealthy families hold cryptocurrencies like bitcoin and ethereum, which they typically view as an important part of their investment portfolios. However, due to the devastation of wildfires, they have been forced to quickly liquidate these assets.
The head of a blockchain research organization in Los Angeles also pointed out that the recent price fluctuations in the market may be related to this large-scale asset sell-off. Particularly against the backdrop of technology circles and high-net-worth individuals generally holding a high proportion of crypto assets, the short-term surge in funding needs after the disaster has intensified selling pressure in the market. Additionally, analysts warned that short-term sell-off behaviors could negatively impact the stability of the cryptocurrency market.
The U.S. Department of Justice has been authorized to sell $6.5 billion worth of seized Silk Road bitcoins.
The U.S. Department of Justice has been authorized to handle 69,370 bitcoins related to the infamous 'Silk Road' case, currently valued at approximately $6.5 billion. This news triggered market volatility, with some investors concerned that the sale of these bitcoins might conflict with Trump's proposed 'establishing a bitcoin reserve' plan. However, Trader T stated on the X platform:
From 'approval' to 'actual sale' may take several months, and the court has established a liquidation plan for 30,000 BTC in 2023.
At the same time, BitMEX co-founder Arthur Hayes stated on the X platform that the 'diamond hands' in the market are ready to buy the dip at this time. CryptoQuant CEO Ki Young Ju also pointed out that about $379 billion entered the market last year, equivalent to about $1 billion per day, so the $6.5 billion worth of bitcoins sold by the U.S. government could be absorbed by the market in just a week, and investors do not need to worry excessively. El Salvador President Nayib Bukele humorously remarked that perhaps we all have a chance to buy bitcoin at a discount.
Coindesk analyst James Van Straten believes that market concerns about the sell-off may be exaggerated. If these 69,370 bitcoins are indeed sold, they may be sold in an orderly manner to obtain the best possible price. The market has already anticipated this situation, so it may have already digested this potential risk.
The Federal Reserve's pace of interest rate cuts is expected to slow down in 2025.
Recently, the Federal Reserve's monetary policy has changed, mainly reflected in the slowdown of interest rate cuts. Boston Federal Reserve Bank President Susan Collins stated that considering the current strong employment data and ongoing inflationary pressure, she believes that the magnitude of rate cuts in 2025 will be less than previously expected by the market. Specifically, Collins supports the Federal Reserve cutting rates twice in 2025, rather than the previously expected four times, and this change reflects the Federal Reserve's cautious attitude towards the economic situation.
The Federal Reserve faces strong economic growth and inflation challenges above 2% in the current economic environment. Kansas City Federal Reserve Bank President Esther George noted that the current economic situation is close to achieving the dual goals of price stability and full employment, suggesting that policy should remain neutral with interest rates close to long-term levels. George emphasized that monetary policy will only be further adjusted when there are significant changes in data.
Additionally, Federal Reserve Board member Michelle Bowman mentioned in a recent speech that she supports last month's rate cut decision, viewing it as the 'final step' in the Federal Reserve's monetary policy adjustment. She pointed out that inflation risks still exist, so future monetary policy decisions will remain cautious.
The challenge facing the Federal Reserve is that while current economic performance is strong, stabilizing the inflation rate at the target level of 2% remains difficult. Esther George predicts that the Federal Reserve may not achieve this goal until 2026.
From the market's expectations, according to CME's 'Fed Watch' data, investors generally believe there is a 93.1% chance that the Federal Reserve will maintain the current interest rates in January 2025. In the coming months, although the probability of rate cuts has increased, the market's expectations for Federal Reserve policy remain relatively cautious.
Overall, the Federal Reserve's monetary policy has undergone adjustments, with a slowdown in the pace of interest rate cuts, reflecting the Federal Reserve's cautious assessment of the current economic situation. Although future rate cuts may still continue, the market expects this process to be slower and more cautious.
In 10 days, the cryptocurrency market trend may become clearer.
In the next 10 days, the cryptocurrency market trend may reach a critical turning point. Despite the recent low market sentiment and slightly weakened investor confidence, multiple signs indicate that the cryptocurrency market is expected to warm up in 2025. Reuters reported that insiders revealed the cryptocurrency industry is actively lobbying the U.S. government, requesting that the Trump administration issue an executive order within 100 days of taking office to establish a U.S. bitcoin reserve. This measure aims to ensure that the cryptocurrency industry can access banking services and plans to set up a dedicated cryptocurrency advisory committee. Sources expect this order could come as early as January 20, 2025. This action may provide new policy support for the cryptocurrency industry and serve as a catalyst for market recovery.
On the other hand, the fundamentals of the crypto market remain robust. Data from IntoTheBlock shows that despite the overall market downturn, the net outflow trend from centralized exchanges (CEX) continues. The data indicates that more and more investors choose to hold assets for the long term rather than panic sell due to short-term price fluctuations. This phenomenon illustrates that there is still strong confidence in the market, and investors remain optimistic about the future growth potential of crypto assets. These behaviors reflect investors' positive attitudes towards the long-term development of cryptocurrencies, hoping that the market can recover after short-term adjustments.
Additionally, the regulatory environment for competitive coins is expected to improve in 2025. Andrew Baehr, managing director of CoinDesk, noted that competitive coins will benefit from changes in the cryptocurrency regulatory environment in 2025, especially as the SEC may ease regulatory pressures on competitive coins, providing a more favorable policy environment for more cryptocurrency projects to launch. Improved regulation will help attract more projects to the market and may further promote healthy market development.
Finally, the trend of integrating AI and cryptocurrency will become increasingly evident. With the participation of Web2 tech giants, the underlying technology of AI in the cryptocurrency field will be further strengthened. Industry leaders like Coinbase, Google, and a16z have joined forces to launch the 'Aiccelerate' project, a decentralized autonomous organization (DAO) aimed at accelerating the deep integration of cryptocurrency and artificial intelligence technologies. AI technology is expected to play an increasingly important role in the development of blockchain projects, transaction execution, and risk management, bringing more innovation and transformation to the cryptocurrency industry.
In summary, despite the current challenging market environment, with gradual implementation of policy support, recovery of investor confidence, and the push from AI technology, the cryptocurrency market in 2025 is expected to gradually recover and may usher in a new peak of development.
(The above content is an excerpt and reprint authorized by our partner PANews, original link | Source: Hive Finance)
Disclaimer: The article only represents the author's personal views and opinions, and does not represent the views and positions of Block客. All content and opinions are for reference only and do not constitute investment advice. Investors should make their own decisions and trades, and the author and Block客 will not bear any responsibility for any direct or indirect losses incurred by investors' trades.
"Bitcoin falls for 4 days: breaking through the 'Christmas bottom', is it time to buy the dip?" This article was first published on (Block客).
