Trump, who was once skeptical of cryptocurrencies, has now made it clear that he wants to relax cryptocurrency regulations and make the United States a "Bitcoin superpower"!
Even promised to fire Gary Gensler, chairman of the U.S. Securities and Exchange Commission, which strictly regulates cryptocurrencies.
Not to be outdone, the Trump family launched a new crypto business, World Liberty Financial, in September 2024, showing its direct financial interest in the space.
Wall Street giants such as Blackstone and Fidelity are also buying Bitcoin crazily, and some companies even hold more than 1 million coins.
Driven by these capitals, the price of Bitcoin soared all the way, once breaking through the $90,000 mark.
Bitcoin has gained more than 25% since November 5, becoming the world’s most notable asset since Trump was elected as the US President.
The current market situation of Bitcoin
The price of Bitcoin has been on a roller coaster ride recently, with ups and downs.
Influenced by Trump's trading logic, Bitcoin once broke through the $90,000 mark, but then quickly fell back.
In the early morning of November 14, Bitcoin broke through $93,000 and quickly fell back to $90,400. As of 9:52, it fell back to $89,000.
Amid rapid price fluctuations, the number of people whose positions were liquidated also increased significantly. According to Coinglass data, in the last 24 hours, a total of 250,000 people had their positions liquidated, with a total amount of $851 million.
During this weekend, Bitcoin fluctuated very little, but it fell below the 90,000 watershed twice in a row!
The reason why Bitcoin transaction logic decays
U.S. stocks have fallen widely last week. The S&P 500 fell 2.08%, the Dow Jones fell 1.24%, and the Nasdaq fell 3.15%.
As U.S. stocks continued to fall last week, Bitcoin's spot ETF has seen outflows for two consecutive days.
There is actually a time difference of about 1-2 days between ETF and spot, so the probability of a pullback to 86,000 this week is very high!
Crucially, on-chain activities also showed signs of weakening. Although the chain maintained positive inflows, the flow rate slowed down significantly!
This means that after breaking through 90,000, the strength of the bulls has begun to weaken significantly!
The Federal Reserve’s policy changes have always been an important external factor affecting Bitcoin prices.
Although the interest rate was cut by 25 basis points in November, the probability of further reduction in December is decreasing. Especially since the current CPI data has ended six consecutive months of decline and started to rebound!
Of course, if the CPI continues to rise, coupled with Trump’s immigration policy and the policy of raising tariffs across the board, it will inevitably lead to higher CPI and the appreciation of the US dollar, but the blow to US stocks will be continuous!
The Fed’s interest rate hike or cut policy will have a wide-ranging impact on global financial markets, and the Bitcoin market is no exception.
When the Federal Reserve raises interest rates, a large amount of global funds flow back to the United States, the US dollar rises, and the price of Bitcoin denominated in US dollars tends to be under downward pressure.
For example, in 2023, the Federal Reserve raised interest rates several times, which suppressed the price of Bitcoin to a certain extent and reduced market activity.
On the contrary, when the Federal Reserve cuts interest rates, the US dollar exchange rate will fall, which will help boost commodity prices. Cryptocurrencies such as Bitcoin may also benefit from the inflow of funds and rise.
As Bitcoin gradually becomes mainstream, it is increasingly affected by the external environment.
Internal factors
The reduction in new narratives is an important internal factor in the decay of Bitcoin trading logic.
In the past developments in the crypto market, new narratives have continued to emerge, bringing new vitality and investment enthusiasm to Bitcoin.
For example, the explosive growth of decentralized applications such as digital gold, smart contracts, DeFi, and GameFi has driven up the price of Bitcoin.
The current lack of new narratives has left the market without new growth points, and investors' enthusiasm has gradually waned.
The increase in institutional voice also makes it difficult for retail investors to influence the market, further leading to the attenuation of Bitcoin trading logic.
As more and more institutional investors enter the Bitcoin market, they control a large amount of Bitcoin supply. According to preliminary estimates by institutions, Wall Street investment institutions currently control about 50% of the Bitcoin supply.
Institutional investors have more rational investment strategies and prefer Bitcoin and new narratives such as AI, DePIN, etc.
This has led to a gradual weakening of the influence of retail investors in the market, making it difficult to drive up the price of Bitcoin.
Institutions may not necessarily reach a consensus, and there may be factions among different institutions, which also increases market uncertainty.
