After four consecutive weeks of upward movement, the BTC price reached a historical high of $ 108,353 on the 17th, but then suddenly plunged, quickly dropping to $ 92,232 within 3 days, a maximum decline of 14.87%. Currently, as the market sentiment gradually stabilizes, the price has recovered to around $ 94,000 and entered a consolidation phase. The support level for the BTC price is currently around $ 92,000. At the same time, Altcoins have suffered severe bleeding, with the prices of many tokens even falling back to the levels before October, wiping out the "Trump effect" increase after Trump's election as US president (the above data is from Binance spot, 5:00 pm on December 10).
Although market trading volume has decreased, the trading volume of BTC spot ETFs remains strong, averaging $4.4 billion per day, reflecting that market activity is still very high. Moreover, on December 23, MicroStrategy officially entered the Nasdaq 100 index, which may open the door for mainstream US funds to passively allocate BTC.
Market Interpretation
On October 23, all three US stock indexes rose, with the Dow Jones index rising 70 points and the Nasdaq index rising about 1%. Affected by the Christmas holiday, trading sentiment was calm on Monday, with "BTC whale" Micro Strategy's stock price falling 8.8% due to BTC price fluctuations. The hawkish signals released by Powell have caused violent fluctuations in the US stock market. However, considering that the market has high expectations for the stimulus policies to be adopted by the new US government, the US stock market may tend to stabilize after short-term fluctuations.
BTC Enters the Year-end Consolidation Phase, Investors Need to Closely Monitor the Trend and Wait for Key Signals
Last week, BTC experienced year-end consolidation, falling back from the historical high of $ 108,353 to the local low of $ 92,000, with a maximum decline of about 15%. The internal reason for this BTC market correction is that the profit rate of short-term profit takers in this cycle has reached more than 30%, and some of them chose to cash out, leading to a rapid increase in the probability of correction. External factors include the Fed's interest rate cuts, the Trump effect, and MicroStrategy's BTC purchases, which have passed their initial strong period and entered the pre-holiday rest period. In addition, factors such as the Christmas holiday, which has a significant impact on BTC ETFs, have also led to the adjustment of BTC.
The Battle of Buying Power in the BTC Selling Frenzy, Prices May Rise to New Highs in Volatility
The behavior of short-term and long-term holders has had a significant impact on price trends. According to the latest data from eMerge Engine of EMC Labs, a total of 268,581 BTCs were transferred to exchanges this week, of which short-term holders contributed 256,826 BTCs and long-term holders contributed 11,755 BTCs. This is the second largest selling week since November.
Nevertheless, the buying power in the market, especially through BTC ETFs, has successfully absorbed this selling pressure. According to eMerge Engine data, the BTC balance on CEX decreased by 27,901 BTCs this week. In addition, the floating profit of short-term holders has dropped from the previous high of 33% to 25%, a level that is usually considered neutral in a bull market.
It is worth noting that the selling volume of long-term holders, who have a decisive influence, has been declining consecutively. This indicates that BTC prices are expected to correct to above $100,000 and gradually rise in volatility.
MicroStrategy Officially Included in the Nasdaq 100 and Continuously Increased BTC Holdings for 7 Weeks, Helping the Long-term Development of BTC Prices
On December 23, MicroStrategy (MSTR.US) announced that it had additionally purchased $560 million worth of BTC at an average price close to the BTC historical high, which was the seventh consecutive week of BTC accumulation. According to documents filed with the US Securities and Exchange Commission, from December 16 to 22, MicroStrategy purchased 5,262 BTCs at an average price of about $106,662, which was the smallest purchase amount in recent weeks.
During the same period, MSTR was included in the Nasdaq 100 index on December 23. Passive funds like QQQ (Invesco QQQ Trust, an ETF tracking the Nasdaq 100 index) will be forced to automatically buy MSTR, and MSTR in turn will be able to use these funds to buy more BTC.
The entire traditional financial passive investment ecosystem will unconsciously buy more BTC due to MSTR's inclusion in major indexes, just as they are unaware of holding NVIDIA stocks. Therefore, as long as MSTR continues to use these funds to buy more BTC, the buying pressure on BTC will continue to grow.
Macroeconomic Dynamics
The Fed's Hawkish Rate Cut Disrupts the Market, Cryptocurrencies Experience "Black Thursday"
On December 18, the Federal Reserve lowered the federal funds rate target range by 25 basis points for the 3rd time, to between 4.25% and 4.50%. Powell clearly stated that the time for controlling inflation is not as expected, and the performance of various economic data in the US is strong, so the Fed is very cautious about the pace of rate cuts next year. The market generally believes that the Fed's rate cut expectations for 2025 will be lowered, from more than 3 times a year to less than 2 times.
At the same time, Powell announced that "the Fed will not allow holding BTC, and will not consider participating in government BTC reserve plans." The Fed's hawkish shift has also suppressed the speculative sentiment in the crypto market released by Trump.
Affected by the Uncertainty of the Trump Administration, US Consumer Confidence Experienced its First Decline Since March in December
According to data released by the Conference Board on Monday, the consumer confidence index fell to 104.7 in December, lower than the market expectation of 113.2, and at the median level of the operating range over the past two years. The confidence index of consumers over 35 years old has declined.
Consumers are not very optimistic about business conditions and their own income prospects. Both the indicator measuring expectations for the next six months and the indicator measuring current conditions have declined, which may further affect the market's confidence in a soft landing for the US economy.
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