Author: 1912212.eth, Foresight News
Bitcoin has been in a downward trend since November 7th, even briefly falling below the $90,000 mark, with the market in a state of despair. A series of macroeconomic negative factors have led the market to expect a drop to around $85,000. Interestingly, Bitcoin eventually stabilized above $89,000 and then rebounded, rising steadily after the CPI data was released yesterday. In the early morning of January 16th, BTC broke through the $100,000 mark again.
Ethereum also rebounded after falling below $3,000, rising to over $3,400 this morning. SOL also broke through $200 this morning after falling below $170. The Altcoin market is warming up, with some Altcoins seeing 5%-8% gains in the past 24 hours. The AI sector has rebounded sharply, with LMT hitting a new high and AIXBT even breaking above $0.9 to a new high.
In terms of contract data, Coinglass data shows that the total liquidation across the network in the past 24 hours was $349 million, with $221 million in short liquidations. The largest single liquidation occurred on Binance, with a $12.6 million ETH/BTC contract.
Recently, MicroStrategy founder Michael Saylor has posted for the tenth consecutive week, asking "Is there a missing green dot on the MicroStrategy portfolio tracker?", hinting that he will continue to increase his Bitcoin holdings. At the Benchmark investor conference in Orlando, Saylor said the company's potential perpetual preferred stock could be the "latest means for investors to gain leveraged exposure to Bitcoin". He pointed out that the company's goal is to provide investors with "returns and volatility equivalent to 1.5 times that of Bitcoin". Saylor's unwavering buy-buy-buy actions and determination have undoubtedly helped alleviate some of the selling pressure in the market.
The market has suddenly shaken off its pessimistic sentiment and warmed up. What is the real reason behind this?
Unexpected decline in US core CPI data, slightly increased probability of rate cut in March
Last night, the US December unadjusted CPI year-on-year rose to 2.9%, the third consecutive month of rebound, reaching a new high since July 2024, in line with market expectations, compared to the previous value of 2.7%. In addition, the US December unadjusted core CPI year-on-year recorded 3.2%, a new low since August 2024, in line with market expectations of 3.3%.
After the CPI data was released, the futures of the three major US stock indexes surged sharply, with Nasdaq futures up 1.52%, S&P 500 futures up 1.31%, and Dow futures up 1.26%. The yield on the US 2-year Treasury bond also fell further, down 6.5 basis points intraday to 4.299%.
Before the CPI data was released, the probability of the Fed keeping rates unchanged in January was 97.3%, and the probability of a 25 basis point rate cut was 2.7%. By March, the probability of keeping the current rate unchanged was 79.8%. After the data release, the probability of a 25 basis point rate cut by the Fed in March rose slightly to 28.2%, up from 23.2% the previous day. However, the probability of no rate cut in March is still as high as 71%.
Nick Timiraos, a veteran Fed reporter known as the "New Fed Wire", believes that the robust employment data, combined with signs of improvement in inflation, have led Fed officials to indicate that they are still prepared to stand pat in January, until they see more evidence that the current rate level is effectively curbing inflation.
Tina Adatia of Goldman Sachs Asset Management said that while the latest CPI data may not be enough to make a rate cut in January a possibility again, it reinforces the view that the Fed's easing cycle is not over.
Ellen Zentner of Morgan Stanley Wealth Management also believes that the CPI data on Wednesday will not change the expectation of a pause in rate hikes at the end of this month, but should dampen some of the discussion about the Fed potentially raising rates.
After the market's concerns about the CPI data were resolved, the inflow of funds into the crypto market resumed. Data from Trader T and Farside Investors shows that the US Bitcoin spot ETF had a net inflow of $754.79 million yesterday, reversing the adverse situation of net outflows for the previous 5 days. The Ethereum spot ETF had a net inflow of $59.12 million, injecting optimism into Ethereum again.
Trump's imminent inauguration, SEC set to reform policies
Trump has only 4 days left before his official inauguration. The market is keeping an eye on his new moves after taking office. As early as January 9th, Reuters reported, citing informed sources, that the industry expects at least one executive order to be issued by January 20th.
Trader Ansem previously stated that the market's uncertainty and fear may subside after Trump's inauguration, depending on Trump's remarks.
On January 16th, Reuters also reported that Trump's SEC team has reviewed some pending crypto enforcement cases in court, and is expected to undertake a comprehensive reform of crypto policies, potentially freezing some lawsuits not involving fraud allegations. Three informed sources said that senior Republican officials at the SEC are preparing to begin reforming the agency's cryptocurrency policies as early as next week after Trump takes office.
Two of the informed sources said that measures being considered by Commissioners Hester Peirce and Mark Uyeda include initiating relevant procedures to ultimately issue guidance or rules clarifying under what circumstances the agency will view cryptocurrencies as securities, and reviewing some ongoing cryptocurrency enforcement cases in court.
Affected by this news, some projects with entanglements with the SEC, such as XRP, rose by more than 17% at one point during the day.
Trump's inauguration and SEC regulatory reform have helped reverse the market's pessimistic sentiment.
Summary
The future market trend is closely watched by the market. Placeholder partner Chris recently tweeted that under a supportive US policy environment, the crypto market's returns in the next few years may no longer exhibit parabolic surges, but rather more stable growth. The pullbacks of mainstream cryptocurrencies may become less extreme. 85%-95% sharp pullbacks usually occur when the market structure has accumulated too much unrealized profits, and the market fears these assets may never rise again. Now, the world is gradually recognizing that Bitcoin and quality crypto assets will exist in the long term, so the "death pricing" experienced by mainstream cryptocurrencies may have become a thing of the past (this does not include certain meme coins).
In addition, Chris believes that the launch of ETFs for BTC and ETH (and perhaps SOL soon) will bring more stable buying pressure to these assets. If you want to know the potential pullback range for BTC, you can observe the 200-week simple moving average (200W SMA), which has been the most reliable technical support during each bear market. Currently, this average is around $40,000, which means the bear market could see a 60% pullback. Chris still believes 2025 will be a volatile but opportunistic year.
The crypto market is clearly affected by macroeconomic and policy factors, and often experiences significant fluctuations at key market events. Investors should pay attention to risk control.
