Original | Odaily Planet Daily (@OdailyChina)
Author | Asher (@Asher_ 0210)
This morning, the Federal Reserve announced a 25 basis point cut to the benchmark policy rate but hinted that the number of rate cuts in 2025 may be lower than previously expected (less than the four cuts predicted in September and also lower than the pre-meeting market expectations of three cuts). Powell described this shift as a 'new phase' in monetary policy, emphasizing that after a 100 basis point cut in 2024, interest rates are now significantly closer to a neutral stance. Such a 'hawkish' signal caused a plunge in the US stock and cryptocurrency markets.
OKX real-time data shows that as of today at 10:50 (all subsequent times are based on this point), BTC briefly fell below $99,000, currently reported at $99,600, down 5.38% in 24 hours, falling below $100,000.
Excluding BTC, ETH briefly fell below $3,600, currently reported at $3,630, down 6.03% in 24 hours; SOL briefly fell below $200, currently reported at $203.83, down 6.94% in 24 hours.
Other mainstream altcoins also experienced significant declines. Among the top 100 market cap coins, the Meme sector saw the largest drop, with WIF falling below $2.5, down 17.6% in 24 hours, currently reported at $2.24; FLOKI fell below $0.000185, down 17.5% in 24 hours, currently reported at $0.000184; PEPE fell below $0.000019, down 16.3% in 24 hours, currently reported at $0.0000187.
In the US stock market, as of the close of the day, all three major indices fell, with the Dow Jones initially down 2.59%, creating the longest single-day consecutive decline record in 50 years (falling for the 10th consecutive trading day); the S&P 500 index fell 2.95%, and the Nasdaq fell 3.56%.
Affected by the overall market uptrend, the total market capitalization of cryptocurrencies has also plummeted. According to CoinGecko, the current total crypto market capitalization has fallen below $2.6 trillion, down 8% in the last 24 hours. The trading enthusiasm among crypto users has also declined, with Alternative's fear and greed index reporting 75 today, shifting from extreme greed to greed.
In terms of derivatives trading, Coinglass data shows that in the past 24 hours, liquidations across the network totaled $853 million, of which long positions accounted for $752 million and short positions for $101 million. In terms of cryptocurrencies, BTC saw liquidations of $157 million and ETH saw liquidations of $135 million.
Bitcoin fell below $100,000 for the first time this week, and altcoins are also experiencing significant declines. When asked about Bitcoin reserves, Powell stated, 'Currently, it is not allowed to own Bitcoin, nor does he wish to change the law.' Is the policy bull market coming to an end, or are there other variables before Trump officially takes office?
Below, Odaily Planet Daily will summarize the viewpoints and arguments of institutions regarding the future market.
What will be the next trend for Bitcoin?
FalconX: Rate cut predictions may not have long-term effects on the crypto market, and Bitcoin's correlation with major stock indices has decreased.
Crypto brokerage FalconX's research director David Lawant stated, 'Although rate cut predictions are currently affecting prices, they may not have long-term effects because Bitcoin's correlation with major stock indices has decreased. The slowing rate of cuts expected in 2025 is not entirely surprising, but it has put some pressure on risk assets, including cryptocurrencies. While macro factors traditionally affect cryptocurrency prices, industry-specific factors may dominate in the coming weeks and months, especially in the context of market expectations for policy changes by the new government.'
Santiment: Compared to the S&P 500 index, Bitcoin's decline is not as significant as normal fluctuations.
Blockchain analysis platform Santiment analysts stated, 'Although BTC's short-term price reaction is disappointing, this month Bitcoin and many altcoins have seen a slight decrease in correlation with the stock market. During bull markets, when cryptocurrencies have little or no correlation with stocks, they tend to thrive. Considering that BTC is temporarily holding above $100,000 and the decline compared to the S&P 500 index is not as significant as normal fluctuations, this can actually be interpreted as a strong signal once the dust settles in the next 24 to 48 hours.'
Grayscale Research: Sovereign wealth funds in Asia and the Middle East are more likely to be the next driving force.
Grayscale Research Director Zach Pandl stated: After Federal Reserve Chairman Powell's speech, the price of Bitcoin plummeted, indicating that investors may have placed too much emphasis on the theoretical possibility of Bitcoin as a strategic reserve. Grayscale Research expects more nation-states to adopt Bitcoin, but the next step is more likely to be sovereign wealth funds in Asia or the Middle East, which already manage highly diversified asset pools.
Bitwise: Liquidity tightening and a strong dollar are the biggest risks facing BTC.
Bitwise Research Director for Europe, Andre Dragosch, believes: 'The biggest problem for the Federal Reserve right now is that despite the rate cut, the financial environment remains tight. Since September, long-term bond yields and mortgage rates have been rising, and the dollar has appreciated, which also indicates a tightening financial environment. The continued appreciation of the dollar also poses macro risks for Bitcoin, as it is related to the contraction of the global money supply, which is often unfavorable for Bitcoin and other crypto assets. In fact, the Federal Reserve's net liquidity continues to decrease. In my view, liquidity tightening and a strong dollar are also the biggest risks facing BTC... On the other hand, BTC's on-chain factors remain very favorable, especially the continued decline in exchange balances, which supports the assumption that the BTC supply gap continues to widen.'
Founder of Split Capital: It is expected that the Federal Reserve's dovish stance will weaken by 2025.
Crypto fund Split Capital founder Zaheer Ebtikar stated, 'Global markets expect the Federal Reserve's dovish stance to weaken by 2025. Therefore, crypto event traders and market makers are reducing risks.' The Federal Reserve officials cut the benchmark interest rate for the third consecutive time on Wednesday but controlled the expected number of rate cuts for 2025. Lower interest rates typically increase demand for most higher-risk assets, such as cryptocurrencies.
Summary
This morning, after the Federal Reserve released a 'hawkish' signal, market expectations for Bitcoin began to diverge, especially as the overall bullish sentiment before breaking the $100,000 mark weakened. Currently, optimists believe that Bitcoin's correlation with traditional stock markets has significantly decreased, and Trump has repeatedly mentioned establishing a strategic Bitcoin reserve, which still supports Bitcoin's future outlook.
However, changes in the macroeconomic environment, such as the appreciation of the dollar and tightening liquidity, may exert some pressure on Bitcoin's price in the short term.
