The reason for Bitcoin's sharp drop last night was due to the negative impact of the ISM Non-Manufacturing PMI and JOLTs job openings data, causing a decline of about $6,000. Last night, U.S. employment data performed better than expected, service sector inflation accelerated, and in November, U.S. JOLTs job openings unexpectedly increased by 259,000 to 8.098 million, while ISM Non-Manufacturing PMI rose from 52.1 in November to 54.1, and the price index rose from 58.2 in November to 64.4, reaching an 11-month high, which undoubtedly suggests that inflationary pressures still exist.
As a result, the market's expectations for an interest rate cut were significantly lowered, especially the probability of a rate cut before July, which has decreased significantly, contrary to the previous expectation of 2-4 rate cuts in 2025. The market now expects a probability of over 95% that the Fed will not cut rates in January, leading to a sharp decline in Bitcoin.
Additionally, Bitcoin's trading volume was relatively low during the past week when it rose, indicating that buying power is weak, and the market is fragile, easily impacted by external factors. The bearish candlestick from yesterday not only completely covered the bullish candlestick from January 6 but also had a greater trading volume than January 6, which means that the current selling pressure has a clear advantage, making further declines more likely.
As for whether it will break below last month's low of 91,500, the current value of Bitcoin's STH RP is 87,645. The trading volume during last night's decline was quite large, and the selling pressure has significantly increased, so the possibility of breaking below 91,500 and receiving support at the STH RP cannot be ruled out. It is necessary to closely observe the changes in trading volume during any further declines; if the trading volume significantly decreases, it indicates weakening selling pressure, thus reducing the probability of breaking below 91,500; conversely, if the trading volume remains large, it indicates persistent strong selling pressure, thus increasing the likelihood of breaking below 91,500.
Regarding whether there will be a local surge in Bitcoin later on,
it mainly depends on two points: first, Trump's policies, and second, interest rate cut expectations. As Trump's policies have been difficult to implement in recent months, the focus should currently be on interest rate cut expectations. If the probability of a rate cut in March significantly decreases, Bitcoin and other cryptocurrencies may decline; conversely, they may rise. If the probability of a rate cut hovers between 40%-60%, the market will likely present a volatile trend, and investors should take profits in a timely manner.
After last night's data release, the probability of a rate cut in March dropped to around 40%, and the probability of a rate cut in May is around 50%. Additionally, Bitcoin had previously rebounded for 8 consecutive days, so a pullback is a normal occurrence, and Bitcoin is still in a state of fluctuation. Unless the probability of a rate cut in March falls below 20%, it is unlikely that Bitcoin will approach or even break below 91,500. The next focus should be on the two sets of economic data on the 10th and 15th, as well as the speech after the FOMC meeting on the 29th, to further assess the market direction.
