Crypto Market Analysis:

As observed over the past two days, altcoins and meme coins have experienced a sharp decline, similar to the aggressive rise they had earlier. This downturn can be attributed to various factors. Earlier this week, Bitcoin and Ether surged amid growing market optimism surrounding Donald Trump’s upcoming presidential inauguration. This was reflected in the increase in perpetual futures funding rates. However, according to Min Jung, an analyst at Presto Research, broader markets, including stocks, are struggling due to macroeconomic concerns, particularly sustained inflation.

This inflation data has led to a 1% drop in both NASDAQ and S&P indices, signaling that the next Federal Open Market Committee (FOMC) meeting may maintain interest rates at their current levels due to high inflation. This news negatively impacts the overall crypto market, resulting in a blood-red market, especially as many long traders are positioning themselves for Bitcoin to hit around the $90k mark.

The CME Group’s FedWatch Tool currently suggests a 95% probability that the Fed will maintain interest rates between 4.25% and 4.5% during the upcoming decision on January 29.

Looking ahead, the anticipation of Donald Trump’s inauguration on January 20 is expected to bring market volatility, as investors expect potential policy shifts. Analysts like Lucas believe that with a pro-crypto majority in Congress and appointments such as Scott Bessent as Treasury Secretary and Elon Musk as an advisor, the administration may significantly shift towards a pro-crypto stance.

Investors are also closely monitoring upcoming economic events this month, including the release of FOMC minutes, non-farm payroll data, and CPI data on January 15, which will provide more insights into the risks associated with monetary policy and inflation.

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