Why did the market rise first and then fall this week? From Trump's dynamics to interest rate cut expectations, from the U.S. plan to sell BTC to the non-farm data coming! Recent hot topics and their impact on the crypto market.
Macroeconomic interpretation: Many friends may wonder why BTC was performing well on Monday, showing signs of breaking new highs, only to plunge from the high point of $102,762 on Tuesday, falling sharply to around $92,500?
On December 26, the day after Christmas (Christmas Day in the U.S.), we analyzed the resistance level for BTC around $102,770 and the support level around $92,520 in that day's research report. Now, this week's highest and lowest points are consistent with the predicted resistance and support levels.
This week, global financial markets and the cryptocurrency market experienced multiple significant events and policy news shocks. These events not only reshaped market trends but also triggered a reevaluation of future trends by investors. Below is a summary of this week's hot events and an in-depth analysis of their impact on the crypto market.
1. Rumors about Trump's tariff policy have triggered market volatility.
On Monday, following a report by the Washington Post that Trump's team is exploring a comprehensive import tariff plan on key imported goods, the U.S. dollar index plummeted, while U.S. stock futures and the crypto market surged. This news reflects the market's high sensitivity to Trump's potential protectionist policies. However, Trump's denial on Tuesday reversed market sentiment, leading to declines in both U.S. stocks and Bitcoin (BTC), indicating the market's heightened vigilance towards policy uncertainties.
2. Delay in Federal Reserve's interest rate cut expectations.
The market generally expected the Federal Reserve to cut rates earlier this year, but this week, the market has significantly pushed back the first rate cut expectations to June or July. This change has led to a re-adjustment of inflation expectations and Federal Reserve rate expectations, putting pressure on dollar-denominated assets such as U.S. stocks and BTC, resulting in price declines. This reflects the market's high attention to the direction of the Federal Reserve's monetary policy and its significant impact on asset prices.
3. Trump's remarks triggered turmoil in global asset markets.
Trump's series of remarks on inflation, interest rates, foreign policy, and military action have further exacerbated the volatility in global asset markets. His proposal to merge the U.S. and Canada using 'economic power' and plans to overturn Biden's offshore drilling ban demonstrate his hardline stance on foreign policy. These statements have had a negative impact on the three major U.S. stock indices and the crypto market, leading to a collective decline in the market.
4. The Federal Reserve's meeting minutes reveal the path for interest rate cuts.
The Federal Reserve's released meeting minutes show that although they decided to cut rates by 25 basis points, the pace of rate cuts is expected to slow significantly by 2025. Market participants still have uncertainty about the path of the federal funds rate over the next year, which increases market volatility. The cryptocurrency market, as a high-risk asset, is particularly sensitive to changes in the Federal Reserve's monetary policy.
5. The U.S. government plans to sell BTC related to the Silk Road case.
The U.S. government's plan to sell BTC seized in the Silk Road case led to a brief drop in BTC. This incident highlights the impact of government policies on the cryptocurrency market. Although Trump has stated that he would not sell any BTC after taking office, it remains to be seen whether the government can smoothly sell these bitcoins.
6. Non-farm data and unemployment rate data are about to be released.
This Friday evening, non-farm data and unemployment rate data will be released. These two data points are crucial for assessing the health of the U.S. economy and will directly impact the Federal Reserve's future interest rate policy. Crypto market investors need to pay close attention to these data, as they could trigger significant market sentiment fluctuations.
Comprehensive analysis: This week's hot events indicate that policy news, economic data, and government actions have a significant impact on the crypto market. Rumors about Trump's tariff policy, the delay in the Federal Reserve's interest rate cut expectations, Trump's tough remarks, and the government's plan to sell BTC have all exacerbated market volatility. At the same time, the release of non-farm data and unemployment rate data will also provide new guidance for the market.
For crypto market investors, in such a volatile market environment, it is important to remain calm and rational, closely monitor changes in policy dynamics and economic data, and adjust investment strategies in a timely manner. In the future, with more policies and economic data being released, the crypto market may face new opportunities and challenges.
BTC data analysis:
After staying in this market for a long time, you will find that when the market rises, we see all good news, while when the market falls, we often see bad news.
Many messages sometimes only serve to guide us, directing market bullish and bearish sentiments, and the media often carries a bullish or bearish bias in their reports, which may have certain vested interests, such as holding short positions and wanting to accumulate at low prices, leading to bearish reports, or holding long positions or wanting to expand spot profits, leading to bullish reports. Of course, this doesn’t necessarily mean the media itself holds positions; it could also be that the capital controlling the media has corresponding holdings.
For example, during this round of bad news, the #U.S. stock market fell, and there was a large outflow of funds from the #Bitcoin ETF overnight. According to Coinank data, $569 million flowed out yesterday, and the U.S. government plans to sell #BTC:
U.S. officials today confirmed to DB News that the Justice Department has been authorized to liquidate 69,370 BTC (worth about $6.5 billion) seized in the Silk Road case. This news led to a brief drop in BTC.
It is reported that the Justice Department is requesting permission to sell these assets due to Bitcoin price fluctuations. When asked about the next steps, a Justice Department spokesperson stated: 'The government will proceed with the next steps based on the judgment of this case.'
The progress of this incident is 'approved for sale', but the Justice Department cannot yet determine when these bitcoins will be sold. There are only 11 days left until Trump officially takes office on January 20, and Trump has stated that he would not sell any bitcoins after taking office. Given the efficiency of the U.S. government, it remains to be seen whether the Justice Department can successfully sell them.
