Original | Odaily Planet Daily ( @OdailyChina )
Author | How to be ( @vincent 31515173 )
Last night, the crypto market began to show a downward trend. OKX data shows that BTC briefly dropped below 69000 USDT, currently reported at 69383.9 USDT, with a 24H decline of 5.18%.
Under the influence of BTC, altcoins led by Ethereum have also experienced a certain degree of correction. As of the time of writing, ETH is reported at 2505 USDT, with a 24H decline of 5.69%; SOL is reported at 167.88 USDT, with a 24H decline of 4.82%; BNB is reported at 576.5 USDT, with a 24H decline of 3.13%; OP is reported at 1.604 USDT, with a 24H decline of 5.92%.
Affected by the overall downward trend, the total market value of cryptocurrencies is facing some shrinkage. CoinGecko data shows that the current total market value of cryptocurrencies has dropped to 2.43 trillion USD, with a 24H decline of 5.7%. However, the trading enthusiasm of crypto users has not diminished; today's fear and greed index is at 75, and the weekly level remains in greed, with the index rising except for a 2-point drop today.
In terms of derivatives trading, Coinglass data shows that in the past 24 hours, the entire network saw liquidations of 275 million USD, most of which were long liquidations, totaling 246 million USD. In terms of currencies, BTC liquidations amounted to 86.5734 million USD, and ETH liquidations amounted to 44.8059 million USD.
Just two days ago, BTC surged to 73650 USDT before pulling back, just about 130 USDT away from this year's previous high of 73787.1 USDT. At that time, institutions were all bullish, and the options market was primarily selling call options. Will the new high come again, and when?
Reasons for the decline: Uncertainty regarding the Federal Reserve's future interest rate cuts.
The apparent reason for the poor market performance is that Bitcoin failed to break through its previous high on October 30, leading to a subsequent decline. Market sentiment around Bitcoin's future price has become more uncertain, causing investor sentiment to become cautious, further intensifying the selling pressure in the market.
The underlying reason may be: uncertainty about the Federal Reserve's interest rate cut expectations.
The recent drop in the crypto market is closely related to changes in expectations for future interest rate cuts by the Federal Reserve. Although the CME 'Fed Watch' expects a 25 basis point cut in November with a probability as high as 96.1%, this expectation faces many uncertainties.
Among them, the rise in U.S. inflation is an important factor influencing Federal Reserve policy. Data shows that the core PCE price index rose by 0.3% month-on-month in September, with a year-on-year rate of 2.7%. This data exceeds the Federal Reserve's target of 2%, indicating that inflation pressures still exist, which may cause the Federal Reserve to pause interest rate cuts at future policy meetings.
Economic performance: Although the economy is operating relatively well and consumption remains strong, the elevated core PCE suggests that the Federal Reserve will be more cautious in cutting rates. Peter Cardillo, Chief Market Economist at Spartan Capital Securities, stated that the signs of rising inflation have been confirmed in the latest data, which could lead the Federal Reserve to pause rate cuts.
External views: Larry Fink, CEO of BlackRock, and Anthony Scaramucci, founder of SkyBridge Capital, both indicated that the Federal Reserve may not cut rates as quickly as the market expects, predicting that another 25 basis point cut would not occur until 2025.
Overall, the uncertainty around the Federal Reserve's interest rate cuts, especially due to rising inflation pressures, is the main reason for the recent drop in the crypto market. The fluctuations in market sentiment and interpretations of the Federal Reserve's future policies will continue to influence the trends of crypto assets.
What's next? The upcoming U.S. election may determine the future direction of the crypto market.
The U.S. election is approaching, and its outcome may have profound effects on the crypto market. JPMorgan analyst Nikolaos Panigirtzoglou pointed out that a Trump victory would further enhance Bitcoin's momentum, especially among retail investors, creating a so-called 'devaluation trade' phenomenon. Retail investors are becoming more actively engaged in purchasing Bitcoin and gold ETFs, even showing strong impulses in investing in meme and AI tokens, which have relatively strong market cap performance.
Matt Hougan, Chief Investment Officer of Bitwise, believes that regardless of the election outcome, the regulatory environment for Bitcoin is improving, which is positive news for the crypto market. The entry and increased adoption of institutional investors, as well as the continuous inflow of ETF funds, are all good signals for the market. In the short term, the crypto market seems to favor a Trump victory, which would have a greater impact on Ethereum and other altcoins.
Data from Matrixport shows that when Trump was first elected in 2016, the Bitcoin price was around $700 and surged significantly in his first year in office. Although a single data point is insufficient to establish a trend, market optimism remains high. If Trump is elected again, it is expected that regulations on the crypto market may be relaxed, further driving up Bitcoin prices.
Current market dynamics show that the prediction market Polymarket estimates Trump's victory probability to be as high as 66.5%, which may be one of the largest margins in history. Meanwhile, Bitcoin demand continues to grow, with recent inflows into several ETFs starting to increase.
In general, the approaching U.S. election is the most direct factor affecting the current crypto market situation, with the market more willing to see Trump win, thus fulfilling his promises to crypto voters.
Additionally, CZ, who has been out of the spotlight for a while, injected confidence into the market from a historical perspective last night. He stated: 'Historically, Bitcoin has gone through a clear four-year cycle, with past bull markets occurring in 2013 and 2017, while 2012 and 2016 were 'recovery years.' Based on this pattern, the market generally believes that 2024 will also be a 'recovery year.' Although specific future conditions remain unclear, the crypto industry is still considered optimistic in the long run.' In light of this, the future crypto market still holds hope.
