Author: Talk Li Talk Outside
At 12:00 AM Beijing time today (December 19), the United States announced the December interest rate meeting, which seems to have had a significant impact on the market. We mainly focused on two points:
The positive aspect is that the Fed will lower interest rates by another 25 basis points, reducing it to 4.25–4.50%.
The negative aspect is that Powell hinted that BTC as a national reserve is unfeasible.
Next, let's briefly analyze these two aspects:
First, regarding interest rate cuts.
In previous articles, interest rate expectations have also been a major focus for us because, theoretically and empirically, a Fed rate cut means that investors may allocate more funds to high-risk markets (such as the crypto market). It is not an exaggeration to say that the major bull market in 2021 was largely compounded by the rate cuts at that time.
If we compare interest rate cuts with Bitcoin prices, we can also clearly see that over time, the significant changes in interest rate expectations increasingly align with key moments in Bitcoin price movements. A major reason for this change may be that traditional market investors are continuously increasing their adoption and holding of Bitcoin, while more and more investors have begun to consider interest rates and other macroeconomic indicators as important reference factors for investing in Bitcoin. As shown in the figure below.
Next is Powell's hint.
At the FOMC meeting, when a reporter asked: Do you see any value or benefits in the US government building a reserve of bitcoin?
Powell said: We're not allowed to own bitcoin. and we're not looking for a law change.
With Powell's remarks, it seems that the market has also experienced some turbulence, causing Bitcoin to briefly drop to around 99,000 USD. In addition, the three major U.S. stock indexes also fell across the board due to this influence. It is not an exaggeration to say that today the Fed seems to have directly crashed the market.
However, I briefly checked, and there’s nothing wrong with Powell's remarks themselves because, in the U.S., the Fed is indeed an independent institution that is not directly controlled by the president or Congress. On the other hand, Congress has the power to amend the rules and laws governing the Fed's operations, and whether this will happen depends on whether Trump formally takes office and his team wants to act as this change agent. However, based on Trump's publicly expressed personal views, he seems very willing to incorporate Bitcoin into the United States' strategic reserves.
Through a simple analysis of the above two aspects, we can think that Fed Chairman Powell's statements at today's meeting did have some impact on the short-term market, but from a longer-term perspective, it does not seem impossible for Bitcoin to become a strategic reserve in the United States.
From a more macro perspective, it seems that the dollar's dominance is gradually declining year by year, while U.S. debt continues to soar, with the total debt now approaching 36 trillion USD. As shown in the figure below.
Therefore, many analysts currently believe that incorporating Bitcoin into the strategic reserve and using dollar BTC for a certain degree of hedging could further strengthen the U.S. position in the digital economy.
Of course, there are other analysts who believe that Bitcoin will threaten the existing dominance of the dollar, and incorporating BTC into the strategic reserve would disrupt the current state of the dollar, making this situation impossible.
As for whether you agree with these two views or which one you resonate with more, it doesn't really matter to others; just remember one thing: the future of Bitcoin is unstoppable.
However, today's Fed meeting has indeed caused panic among many, and Powell's remarks have also triggered a new round of liquidations across the entire cryptocurrency market. According to on-chain data, in just the past 12 hours, the liquidation scale in the crypto market has exceeded 680 million USD, with approximately 600 million USD of long positions liquidated. As shown in the figure below.
At the same time, many people also seem to be engaging in panic selling, especially in the altcoin market, where many altcoins have experienced double-digit declines in a single day. As shown in the figure below.
As for the upcoming short-term market trend, I've seen some individual analysts expressing pessimism, believing that Bitcoin will soon drop below 60,000 USD. However, personally, I think the probability of dropping below 90,000 this month is low, but I won't stop anyone's actions. Although I always remind everyone to be patient and stay calm, I will also respect everyone's thoughts and decisions.
Just as we mentioned in our previous article (December 17): the market is often like this. When prices rise, various potential positive news and analyses based on this will appear in front of people. When prices fall, various media will immediately create negative news to match market sentiment.
In the next couple of days, we will probably continue to see some reports or news through various media, social platforms, and communities: such as a certain institution will suspend buying or plan to sell Bitcoin, a certain whale has started selling Bitcoin, or a certain teacher successfully escaped the peak before this drop...
This morning, I happened to see a partner in the group share a rather interesting picture, which I will directly share with everyone here. Let's have some fun together.
