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I am Yudong
This morning (December 19), the cryptocurrency market experienced a thrilling bloody storm! The "hawkish statement" by Federal Reserve Chairman Powell was like a heavy punch to Bitcoin, and the price of Bitcoin plummeted from $105,000 to $98,800 in an instant. This tragic plunge directly triggered a wave of liquidation of more than $600 million, and more than 200,000 people were liquidated overnight, which completely collapsed the crazy bulls in the cryptocurrency market.
Powell’s hawkish statement caused a major earthquake in the cryptocurrency world!
As a weathervane of the global financial market, every statement of the Federal Reserve affects the nerves of the market. This time, Powell said bluntly at the press conference after the interest rate decision: the threshold for future interest rate cuts will be higher and monetary policy will be more cautious! This sentence completely broke the market's fantasy of loose policies. In addition, he also made it clear that Bitcoin does not have the possibility of being included in the Federal Reserve's balance sheet. Just a few words completely caused the high-level Bitcoin price to collapse. Data shows that after Powell's speech, the price of Bitcoin plummeted by $5,000 in 10 minutes, directly bringing the market to a freezing point! During this period, a total of about 232,511 people were liquidated, and the largest single liquidation occurred in Binance's ETHUSD_PERP, worth about $4.0677 million.
Two major questions for people in the crypto world: Did Powell really crash the bull market?
1. Why can Federal Reserve policies directly affect Bitcoin? Powell's hawkish stance has the following impacts on Bitcoin: Sudden drop in risk appetite: The high-interest rate environment has led more funds to flow into the US dollar and low-risk assets, while high-risk assets like Bitcoin have been sold off. Strengthening of the dollar index: Last night, the dollar index (DXY) strengthened again to 104.5, and the negative correlation between Bitcoin and the dollar has further suppressed its price. Reduced market liquidity: High-interest rate policies mean that global market liquidity is further tightened, and reduced speculative funds directly affect Bitcoin's price.
2. Can Bitcoin rise again? From last night's on-chain data, after the crash, there are signs of some funds flowing back into the market: Whale accounts' actions: Last night, over 50,000 BTC flowed out of exchanges, indicating that some large holders are accumulating at low levels. Altcoins' resilience: Mainstream altcoins, led by ETH and SOL, have fallen significantly less than Bitcoin, indicating that the overall market sentiment has not completely collapsed. Market history tells us that similar sharp declines are not uncommon in bull markets. This may just be a 'healthy correction' during the bull market. However, in the short term, Bitcoin's price may continue to fluctuate; the key is whether the support level of $98,000 can be maintained.
Bull market or 'bull trap'? What should we do?
In this thrilling crash, we witnessed the madness of the crypto world and the risks of the market, and felt the huge impact of policy changes on Bitcoin. So how should we respond next?
1. Maintain rationality to avoid chasing highs and selling lows.
Bitcoin may currently enter a short-term consolidation phase; do not easily leverage to chase rebounds.
2. Pay attention to the macroeconomic environment.
The Federal Reserve's policies remain key to the upcoming market trend. If the dollar index continues to strengthen, it may put further pressure on Bitcoin.
3. Selective coin types to diversify risks.
During Bitcoin's adjustment period, high-quality assets like ETH and SOL have shown strong resilience and are worth noting.
Powell's statement shook the crypto world! Last night's plunge in Bitcoin reminds us that the crypto market has never been a 'sure-win game.' High volatility and high risk are characteristics of the crypto world; how to achieve steady profits during a bull market is a question every investor needs to ponder. What do you think about this event of 'Powell crashing the crypto world'? Feel free to leave a comment to discuss the future of the bull market!