Market Overview: Bitcoin Rises, Sparking Market Discussions Ahead of the Fed Meeting
This week, the cryptocurrency market maintained a strong momentum, particularly with Bitcoin's performance being particularly noteworthy ahead of the Federal Reserve's policy meeting on December 18, with the price remaining stable at around $102,182.
- The total market capitalization of the global cryptocurrency market is $3.64 trillion, with BTC's market dominance at 55.15%, maintaining its leading position in the market.
- The direction of the Fed's policy has become the focus of market attention this week, with the expectation of rate cuts providing strong support for risk assets like Bitcoin.
Fed Policy Expectations: What Happens After a 25 Basis Point Rate Cut?
Recently, the Barclays research team released a report, clearly stating that the Fed will take a 25 basis point rate cut action at this meeting, lowering the federal funds rate target range to 4.25%-4.50%.
- The rate cut is in line with market expectations, but the key is the Fed's subsequent policy stance:
- Barclays expects Fed Chair Powell to signal a more gradual rate cut approach, shifting to a more neutral policy stance.
- He may emphasize that the U.S. economy is growing steadily, the labor market is close to full employment, and the risks to inflation and employment are broadly balanced.
The Economic Projections (SEP) will be the core focus of market attention:
- Upward revision of GDP growth: Reflecting the resilience of the economy.
- Slight increase in inflation expectations: Inflationary pressures may continue to moderate.
- Downward revision of the unemployment rate: The job market has performed better than expected.
Furthermore, Barclays expects three rate cuts by 2025, with the long-term rate expectation remaining at 2.9%, but the pace of rate cuts may gradually slow down.
Bitcoin Performance: Dual Drivers of Inflows and Policy Linkage
Continuous Net Inflows to Spot ETFs The performance of U.S. Bitcoin spot ETFs has been impressive, with net inflows reaching $2.174 billion this week, becoming an important force driving Bitcoin's rise.
- Institutional investors have increased their allocations through ETFs, enhancing market liquidity and confidence.
- The continued expansion of major players like BlackRock and Grayscale indicates that institutional investment is accelerating.
Strengthened Hedging Properties As the expectation of Fed rate cuts has intensified, the expected returns of traditional assets have declined, and the market has gradually viewed Bitcoin as a hedge against inflation and economic uncertainty.
- The Fed's shift towards a more accommodative policy has increased U.S. dollar liquidity, further benefiting risk assets.
- Bitcoin is seen as "digital gold," attracting more long-term capital allocation amid macroeconomic turbulence.
Heightened Market Sentiment The "Fear and Greed Index" remains at 83, reflecting a continued "Greed" state in the market.
- With the stable inflow of ETF funds and policy tailwinds, Bitcoin is expected to maintain an upward trend in the short term, but high volatility risks need to be monitored.
Market Outlook: Can BTC Set a New High After the Fed Meeting?
Market Reaction After Rate Cut If the Fed cuts rates as expected, BTC will receive further support from the increase in macroeconomic liquidity and may challenge new highs for the year.
- If Powell signals a more cautious policy stance, the market may experience short-term volatility, but the long-term trend remains healthy.
- AI Sector and Capital Flows With the launch of Solana's first AI hackathon, the integration of the AI sector and the crypto ecosystem continues to drive market trends, and the future capital flows are worth paying attention to:
- Innovative applications of AI tools and blockchain
- Long-term potential of ecosystem building and public chain projects
- Technical and Fundamental Support On-chain data shows that the number of long-term holders (HODLers) continues to grow, further strengthening Bitcoin's supply scarcity. With the influx of new capital through ETFs, the long-term value proposition of Bitcoin is being reinforced.
Conclusion: Policy Expectations and Market Momentum, a Critical Moment for BTC
The Fed's policy meeting will be the decisive event for the market this week, and the expectation of rate cuts will provide strong support for risk assets like Bitcoin.
- If the policy is implemented and capital continues to flow back, BTC may break through the current highs and continue to strengthen.
- However, the market needs to be aware of the possibility of a slower pace of Fed policy and the short-term risks of high volatility.
BTX will continue to provide in-depth market insights to help you seize market opportunities and gain foresight into the future.
The above content is from public market information and is for reference only, not constituting any investment advice. The cryptocurrency market carries high risks, and investments should be made with caution.
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