Source: Talk Li Talk Outside
Beijing time early this morning, the US announced the December interest rate meeting, which seems to have a relatively large impact on the market. The two main points we are concerned about are:
The positive aspect is that the Federal Reserve will further lower the interest rate by 25 basis points, i.e. a 25bp cut to 4.25–4.50%.
The negative aspect is that Powell hinted that BTC as a national reserve is not feasible.
First, on the interest rate cut
In the previous articles of Talk Li Talk Outside, the expectation of interest rate cuts has also been one of our major concerns, because from a theoretical and practical perspective, the Federal Reserve's interest rate cut means that investors may allocate more funds to high-risk markets (such as the Altcoin market), and it is not an exaggeration to say that the big bull market in 2021 was mainly due to the interest rate cuts at that time.
If we compare the interest rate cuts and the Bitcoin price trend, we can also clearly find that as time goes by, the key moments of the major changes in interest rate cut expectations and the Bitcoin price trend are increasingly coinciding, and the main reason for this change may be that traditional market investors' adoption and holding of Bitcoin are constantly increasing, and more and more investors have taken interest rates and other macroeconomic indicators as one of the important reference factors for investing in Bitcoin.
Secondly, 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 the release of Powell's remarks, the market also seemed to have been shaken, causing Bitcoin to drop to around $99,000 in a short period of time. In addition, the three major US stock indexes also experienced an across-the-board decline under this influence. It is not an exaggeration to say that the Federal Reserve directly led to the market collapse today.
However, a simple search shows that Powell's remarks themselves are not problematic, because in the US, the Federal Reserve is an independent institution that is not directly controlled by the President or Congress. But on the other hand, Congress has the power to amend the rules and laws governing the operation of the Federal Reserve, and whether this will happen remains to be seen until Trump officially takes office and whether his team will play the role of reformer. However, based on Trump's publicly expressed personal views, he seems quite willing to include Bitcoin in the US strategic reserve.
Through the simple analysis of the above two aspects, we can conclude that Powell's statement at the meeting today did have some impact on the short-term market, but from a longer-term perspective, it is not impossible for Bitcoin to become the US strategic reserve.
Because from a more macro perspective, the dominance of the US dollar seems to be gradually declining, while the US debt is continuously soaring, and the current total debt has reached nearly $36 trillion.
Therefore, many analysts believe that the US incorporating Bitcoin into its strategic reserve and using the US dollar-BTC to hedge to a certain extent can help strengthen the US's position in the digital economy.
Of course, there are also other analysts who believe that Bitcoin will threaten the existing hegemony of the US dollar, and incorporating BTC into the strategic reserve will disrupt the status quo of the US dollar, so this is unlikely to happen.
As for which of these two views you agree with or which one you agree with more, it is actually not important to others. Just remember one thing: the future of Bitcoin is unstoppable.
However, today's Federal Reserve meeting has indeed caused a lot of panic, and Powell's remarks have also led to a new round of liquidation in the entire Altcoin market. According to on-chain data, the scale of crypto market liquidation in the past 12 hours has exceeded $680 million, of which long positions were liquidated by about $600 million.
At the same time, many people also seem to be in a state of panic selling, especially in the Altcoin sector, with many Altcoins experiencing double-digit daily declines.
As for the short-term market trend going forward, I've seen some analysts expressing quite pessimistic views, believing that Bitcoin will quickly fall below $60,000. However, personally, I don't think the probability of it falling below $90,000 this month is very high, but I won't stop anyone's operations either. Although I always remind everyone to be patient and stay calm, I also respect everyone's ideas and decisions.
Just as we mentioned in our previous article (December 17): the market is often like this, when the price is rising, all kinds of potential positive news and various analyses based on it will appear in people's eyes. And when the price is falling, the media will immediately create various negative news to match the market sentiment.
In the next few days, we will likely continue to see some reports or messages through certain media, social platforms, and communities: such as certain institutions will temporarily suspend buying or plan to sell Bitcoin, certain whales have already started selling Bitcoin, certain teachers have successfully escaped the top again before this decline...
Coincidentally, this morning I saw a rather interesting picture shared by a partner in the group, so I'll share it with everyone here as well, just for fun.
