The waterfall has been washing faces for a week.
In the early hours of December 20, the market reacted to the previous day's Federal Reserve 'hawkish' delay in rate cuts, and the crypto market plunged. Bitcoin dropped below 96,000 USDT, while Ethereum fell from a high of 3,900 USDT in the early hours of the 19th to 3,322 USDT. The intense volatility caused a liquidation volume of over 1 billion USD in 24 hours across the network, with altcoins experiencing even more severe declines.
The feast is over. Am I paying the bill again? Should I sell to escape the peak or boldly buy the dip?
If you are angry with yourself for not selling before the FOMC's hawkish tone led to a pullback, remember that you have almost no edge in predicting market reactions, and view it as an opportunity to take your time. Don't overtrade. In the long run, as long as you are patient, you will be fine.
If Bitcoin reaches 90,000 USD (the chances are slim), it will cause a large number of altcoin liquidations, providing a very good buying opportunity.
If Bitcoin's structure breaks down, a large amount of buying is expected to reappear at 90,000. In pure panic, it may fall all the way to 85,000 USD. Altcoins will completely crash.
The suitable buying price for ETH would be 3,000, and for SOL, it would be 160.
Is this wave of decline just an interlude in the bull market, or is it a real turning point in market trends?
Last night, the Federal Reserve announced a 25 basis point rate cut. The market initially expected this would lead to a rebound, but Powell's subsequent speech caused a sudden shift in investor sentiment. He stated that despite the decline in inflation, the pace of cooling did not meet expectations, and the number of rate cuts in 2025 would be significantly reduced.
For risk assets like Bitcoin, high interest rates mean increased funding costs and rising investment risks. Therefore, Bitcoin dropped rapidly, and market sentiment turned cold. Additionally, Powell responded to Trump's proposal to establish a Bitcoin reserve, clearly stating that the Federal Reserve cannot hold Bitcoin and does not intend to change the existing legal framework. This further increased market uncertainty.
From a technical perspective, Bitcoin is currently showing signs of a short-term adjustment, with bullish momentum weakening and forming a typical top divergence. Additionally, the daily chart shows a 'top splitting' structure, suggesting potential downward pressure in the short term. On-chain data shows a decrease in the number of active trading addresses, while inflows to exchanges have increased, indicating that some investors are taking profits at high levels. Meanwhile, risk aversion sentiment in the derivatives market is rising, with demand for put options reaching a three-month high.
