Analyze a few reasons for this wave of decline:

(1) Hawkish statements from the Federal Reserve

Last night, although the Federal Reserve lowered interest rates by 25 basis points as expected, the dot plot cut the expectation of four rate cuts next year down to two, and the four cuts in 2026 were also reduced to two. This is arguably the most hawkish dot plot of the year. Powell's post-meeting statements were also very hawkish, emphasizing that the pace of rate cuts will slow and expressing concerns about a rebound in inflation. The most provocative statement by Powell was directly mentioning Bitcoin, saying, "We are not allowed to hold Bitcoin." This statement caused the market to collapse.

Of course, it was not just the cryptocurrency market that crashed; the Dow Jones fell for ten consecutive days, creating the longest losing streak since 1974, with a decline of over a thousand points. The S&P dropped nearly 3%, marking the largest decline on a rate cut day since 2001, and the Nasdaq fell over 3%. Tesla dropped over 8%, etc. In summary, the previous decline in the U.S. stock market led to a crash in the crypto market, and after Powell's mention, the crypto market fell again.

(2) MicroStrategy unable to purchase Bitcoin

MicroStrategy announced last night that it will suspend issuing convertible bonds to purchase Bitcoin in January because January 2025 is the lock-up period for MSTR stock. During this period, MicroStrategy cannot raise funds to purchase Bitcoin through on-market trading (ATM) by issuing stocks and convertible bonds. There are two interpretations of the specific timing of this lock-up period; some believe it is a full month ban, while others predict it starts on January 14 for 30 days. Currently, MicroStrategy has not responded to this rumor.

In any case, this news is definitely bearish for Bitcoin. In recent waves of Bitcoin price increases, we have seen news of MicroStrategy's increased positions. The fund flow into ETFs was also affected by MicroStrategy's accumulation, with only $275 million flowing into Bitcoin ETFs last night, halving compared to the average level for this week.

However, in the long run, the current decline in Bitcoin is not a big deal!

Regarding Powell's bearish stance on Bitcoin, it is known that Trump is bullish, and now Trump's power is basically at its peak in the U.S. Powell's departure is just a matter of one statement; even if he is not removed, Arthur Hayes believes that Trump can counterbalance Powell through his nominated Treasury Secretary Scott Bessent. In short, this wave of market decline is indeed a bit impulsive, and rational thinking should distinguish between big and small players; this pullback is just clearing leverage and setting up for everyone to get on board.