On Monday, Bitcoin struggled a bit at the $94,500 level and attempted to rebound, but technically there were 'three red candles,' which made the bulls a bit nervous.
On the U.S. side, President-elect Trump made two appointments, one being Bo Hines as the executive director of the Presidential Digital Asset Advisory Council, and the other nominating Stephen Moore to chair the Economic Advisory Council.
MicroStrategy's founder Saylor also spoke up, stating that Trump is serious about establishing a national Bitcoin strategic reserve and that he has met with the new government team several times.
Trump recently nominated economist and his former advisor Stephen Moore to chair the Economic Advisory Council. This council will provide the administration with advice on economic policy and strategy. Trump has previously stated that he believes financial deregulation will be an important part of this, and he feels that cryptocurrency could play a significant role in innovation and driving the economic prosperity of the Trump administration. Many in the crypto community are pleased with Moore's nomination, believing it is good news for the crypto industry.
Saylor posted an asset framework on Twitter over the weekend, advocating for the establishment of a Bitcoin reserve, saying it could create $16 trillion to $81 trillion in wealth for the U.S. Treasury, offsetting national debt. In an interview with CNBC, he stated that he believes Trump is serious about establishing a national Bitcoin reserve and that if he knows where the funding is going, he should invest in the future. He said all funding from outside the U.S. and all old capital from the 20th century will flow into digital assets and the Bitcoin network, making it most rational for the U.S. to buy Bitcoin now and seize the future.
Saylor suggested that the government could sell gold reserves or borrow a bit of money to purchase 20-25% of the circulating Bitcoin. He emphasized that Bitcoin will grow 100 times in the future and advised investors to buy early. He also urged the Trump administration to take the lead in establishing a digital asset framework, clarifying the roles of different entities and defining the responsibilities of participants.
In November, Trump mentioned that he intended to establish a cryptocurrency advisory council to provide advice on digital asset policy and work with Congress to develop relevant legislation to help establish a Bitcoin reserve. Several cryptocurrency companies, including Ripple, Kraken, and Circle, are competing for a seat on this council.
Saylor may also become a member of the cryptocurrency advisory council. In an interview with Bloomberg on December 19, he said he is willing to serve as a cryptocurrency advisor under the Trump administration.
When asked if he had already been in contact with Trump or members of the Trump administration, Saylor said, "I will meet many people in the incoming government, but I can't say more than that."
However, when asked if he would be willing to join the cryptocurrency advisory council, Saylor made it clear that he would be willing to provide advice on digital asset policy both publicly and privately if Trump asked him to do so. He said, "I have always been willing to offer advice on constructive digital asset policy, whether in private or public. If invited to participate in some type of digital asset advisory council, I might agree, yes."
Recently, Bitcoin's movement has been interesting. Do you know CoinTelegraph? They found that there have been three consecutive red candles on Bitcoin's daily chart, the first time since November, and the timing is quite coincidental, just before Trump won the election. Another similar point is that Bitcoin has returned to the 50-day EMA level.
Analysts say that Bitcoin has fallen more than 15% from its peak, and for this largest cryptocurrency, most of the downward trend may have ended.
Then, on December 20, the price of Bitcoin fell below $93,000. An independent cryptocurrency trader, Captain Faibik, said that the Bitcoin adjustment is about to end. He stated that the current drop in Bitcoin is due to a significant bearish divergence between the price and RSI over the past month, which typically leads to an 8-10% drop, and he feels this is a 'healthy reset.' However, another anonymous trader, Cold Blooded Shiller, predicted that Bitcoin might experience a larger correction, comparing the current trend to January 2024, saying that if history repeats itself, Bitcoin could drop to $85,000.
Additionally, futures market analyst Byzantine General stated that spot holders have been selling off. He said, "We are currently actually getting perpetual options premium because there has been too much spot selling, and it has become disconnected from the derivatives market."
Finally, CryptoQuant analyst Maartunn stated that this is the largest sell-off on Coinbase since Bitcoin's price reached $66,000. The selling pressure is particularly strong because the Coinbase premium has dropped to a quarterly low.
U.S. PCE lower than expected, the dollar remains supported by 'hawkish' backing.
The yield on U.S. long-term government bonds has recently climbed again, with the yield on the 10-year Treasury approaching 4.60%, while the yield on the 30-year Treasury is at 4.77%, making the yield curve steeper.
The PCE data for November was slightly weaker than expected, with the overall inflation rate at only 0.1% month-on-month and 2.4% year-on-year, both lower than the previous forecast of 2.5%. The core PCE data also fell short of expectations. However, this slight deflationary data may not cause the Federal Reserve to change their recent hawkish stance.
The Federal Reserve's tough stance and the reduction in expectations for interest rate cuts in 2025 continue to support the dollar's relative strength.
Additionally, the GDP growth for the third quarter was quite strong, reaching an annualized compound growth rate of 3.1%, with consumer spending also remaining robust, indicating the potential resilience of the U.S. economy.
The Atlanta Fed's GDPNow model predicts a 3.2% economic growth rate for the fourth quarter (annualized compound growth rate), while the New York Fed's Nowcast model predicts 1.9%. Both forecasts are quite optimistic and maintain a positive outlook on economic growth.
