Original | Odaily Planet Daily (@OdailyChina)
Author | Fu Ruhe (@vincent 31515173)
Last night, the cryptocurrency market began to show a downward trend. OKX market data shows that BTC briefly fell below 69,000 USDT, currently trading at 69,383.9 USDT, a 24-hour decline of 5.18%.
Under the influence of BTC, Altcoins led by Ethereum have also experienced a certain degree of correction. As of the time of writing, ETH is currently trading at 2,505 USDT, a 24-hour decline of 5.69%; SOL is trading at 167.88 USDT, a 24-hour decline of 4.82%; BNB is trading at 576.5 USDT, a 24-hour decline of 3.13%; OP is trading at 1.604 USDT, a 24-hour decline of 5.92%.
Affected by the overall downward trend, the total cryptocurrency market capitalization has faced a certain degree of contraction. CoinGecko data shows that the current total cryptocurrency market capitalization has fallen to $2.43 trillion, a 24-hour decline of 5.7%. However, the trading enthusiasm of cryptocurrency users has not weakened, with the Fear & Greed Index currently at 75, still in the "Greed" range, and only a 2-point drop today, with the index rising at other times.
In terms of derivatives trading, Coinglass data shows that $275 million in positions were liquidated across the network in the past 24 hours, with the vast majority being long positions, amounting to $246 million. In terms of cryptocurrencies, BTC had $86.57 million in liquidations, and ETH had $44.80 million in liquidations.
Just 2 days ago, BTC rose to 73,650 USDT before falling back, only about 130 USDT away from this year's March high of 73,787.1 USDT. At that time, institutions were unanimously bullish, and the options market was mainly selling call options. Will the new high come, and when will it come?
Reasons for the Decline: Uncertainty about the Fed's Future Rate Cuts
The surface reason for the poor market performance is: Bitcoin failed to break through the previous high on October 30, and then began to decline, increasing market uncertainty about Bitcoin's future price, leading investors to become more cautious, and further exacerbating the selling pressure in the market.
The underlying reason may be: the uncertainty about the Fed's rate cut expectations.
The recent decline in the cryptocurrency market is closely related to the changes in expectations of future rate cuts by the Fed. Although the CME "Fed Watch" expects the Fed to cut rates by 25 basis points in November, with a probability of 96.1%, this expectation faces many uncertainties.
Among them, the rebound in US inflation is an important factor affecting the Fed's policy. Data shows that the monthly core PCE price index rose 0.3% in September, with an annual rate of 2.7%. This data is higher than the Fed's 2% target, indicating that inflationary pressures still exist, which may cause the Fed to pause rate cuts in future policy meetings.
Economic Performance: Although the economy is performing relatively well and consumption remains strong, the high core PCE means the Fed will be more cautious in cutting rates. Peter Cardillo, chief market economist at Spartan Capital Securities, said the signs of rising inflation have been confirmed in the latest data, which could lead the Fed to pause rate cuts.
External Opinions: BlackRock CEO Larry Fink and SkyBridge Capital founder Anthony Scaramucci both said the Fed may not cut rates as quickly as the market expects, and they expect the Fed to cut rates by 25 basis points again only in 2025.
In summary, the uncertainty about the Fed's rate cut expectations, especially the pressure from rising inflation, is the main reason for the recent decline in the cryptocurrency market. The volatility of market sentiment and the interpretation of the Fed's future policies will continue to affect the trend of cryptocurrency assets.
What's Next? The Upcoming US Election May Determine the Future Direction of the Cryptocurrency Market
The US election is approaching, and its outcome may have a profound impact on the cryptocurrency market. JPMorgan analyst Nikolaos Panigirtzoglou pointed out that a Trump victory would further boost Bitcoin's momentum, especially among retail investors, forming a so-called "devaluation trade" phenomenon. Retail investors are becoming more actively buying Bitcoin and gold ETFs, and even showing strong impulses in investing in meme and AI tokens, which have performed relatively well in market capitalization.
Bitwise Chief Investment Officer Matt Hougan believes that regardless of the election outcome, the regulatory environment for Bitcoin is improving, which is positive news for the cryptocurrency market. The entry of institutional investors, the increase in adoption rates, and the continuous inflow of ETF funds are all positive signals for the market. In the short term, the cryptocurrency market is more inclined to a Trump victory, which will have a greater impact on Ethereum and other Altcoins.
Matrixport's data shows that when Trump was first elected in 2016, the Bitcoin price was around $700, and it rose significantly in the first year of his term. Although a single data point is not enough to establish a trend, the market's optimistic sentiment is still high. If Trump is re-elected, it is expected that he may relax regulations on the cryptocurrency market, thereby driving Bitcoin to rise further.
Current market dynamics show that the Polymarket prediction market estimates Trump's chances of winning at 66.5%, which may be one of the largest leads in history. At the same time, the demand for Bitcoin continues to grow, and the inflows of multiple ETFs have started to increase recently.
In summary, the upcoming US election is the most direct factor affecting the current cryptocurrency market situation, and the market is more willing to see Trump win, thereby fulfilling his promises to the cryptocurrency electorate.
In addition, CZ, who has been absent for a long time, also injected confidence into the market last night from the perspective of historical cycles, stating that "historically, Bitcoin has had a clear four-year cycle, with bull markets occurring in 2013 and 2017, and 'recovery years' in 2012 and 2016. Based on this pattern, the market generally believes that 2024 will also be a 'recovery year'. Although the specific situation in the future is still unclear, the cryptocurrency industry is still considered optimistic in the long run." In view of this, the future cryptocurrency market outlook is still full of hope.
