Traders have pushed back their bets on when the Federal Reserve will start cutting interest rates from May to June.
Written by: 1912212.eth, Foresight News
Around 4 pm on March 9th, Bitcoin fell again, dropping from a high of $86,000 to a low of $80,000, while Ethereum also fell from around $2,200 to below $2,000, and SOL fell from $140 to $124. The altcoin market was also significantly impacted, with large declines across the board. According to Coinglass data, the total liquidations in the derivatives market reached $614 million in the past 24 hours, with $537 million in long positions being liquidated.
Since March this year, the market fear index has fallen below 20 on multiple occasions, which is quite rare. Even in the middle of 2024, such panic sentiment was not seen, with the market in constant decline. Has the bull market really come to an end?
Bitcoin Spot ETF Sees Consecutive 5-Day Large Net Outflows
The data for Bitcoin spot ETFs is not optimistic. There have been multiple large net outflows since February this year, and there have even been consecutive 5-day large net outflows since early March.
On March 4, there was a net outflow of $143.43 million, on March 6 a net outflow of $134.26 million, and on March 7 there was even a rare net outflow of over $400 million. The continuous large net outflows of funds have had an obvious negative impact on the Bitcoin price, and the lack of buying pressure has led to the price constantly declining.
For Ethereum spot ETFs, there have also been consecutive 3-day net outflows, with only a small net inflow of $14.58 million on March 4 since February 20.
Market Bets on Fed Rate Cut Timing Pushed Back from May to June
The timing and magnitude of rate cuts are of great concern to crypto market traders. US job growth in February was slightly lower than expected, testing the resilience of the labor market amid policy uncertainty. US non-farm payrolls increased by 151,000 in February, compared to an estimate of 160,000. Average hourly wages rose 0.3% month-over-month and 4.1% year-over-year. The unemployment rate rose to 4.1%. But with the possibility of disruptive trade policies and significant federal spending cuts potentially disrupting economic growth this year, the previously robust labor market is starting to show cracks. After the report's release, short-term interest rate futures traders pushed back their bets on when the Fed will start cutting rates from May to June, but still expect a total of three rate cuts by 2025.
Influential Federal Reserve official and board member Waller stated that he would not support a rate cut in March, but believes there could be two or even three rate cuts this year.
Waller said at the Wall Street Journal CFO Network Summit that he wants to see more data on the state of the economy before implementing further rate cuts, especially given the backdrop of changes in the Trump administration's trade policies.
After cumulative rate cuts of 1 percentage point in the final months of 2024, the Fed stood pat at its January meeting, and the market widely expects the Fed to remain on hold at its March 18-19 FOMC meeting as well. Several Fed officials have indicated they want to see more progress in cooling inflation before cutting rates again.
Government Bitcoin Reserve Hype Fizzles, White House Crypto Summit Lacks Substance
On March 7, Trump signed a high-profile executive order officially establishing a "US Strategic Bitcoin Reserve". This fulfilled part of his campaign promise to incorporate Bitcoin into the national financial strategy. However, a subsequent statement from White House AI and Crypto Affairs lead David Sacks sparked intense market and public reaction: "The government will not acquire any additional assets for this fiat digital asset stockpile, except for Bitcoin obtained through criminal or civil asset forfeiture proceedings."
The market's initial expectation of the government increasing its Bitcoin holdings turned into disappointment. The market then continued to decline. However, the market's attention quickly shifted to the White House crypto summit.
The participants in the summit were highly influential figures in the crypto industry, including VC partners, well-known project teams, and exchange founders. The speakers at the White House crypto summit mostly praised the progress in the crypto space under the Trump administration and expressed admiration for Trump himself.
The only noteworthy point was Trump's statement that he expects the House and Senate to pass stablecoin legislation before the "August recess".
This underwhelming performance led the market sentiment to turn pessimistic, and BTC fell sharply from around $90,000 at the start of the meeting on March 8.
Future Market Outlook
There are divergent views on the future market outlook. Trader Eugene Ng Ah Sio said in a TG group that he is not eager to participate at current price levels, reiterating that $75,000 is the only level he is currently interested in.
WhaleWire founder Jacob King wrote that the Bitcoin bear market has arrived. The failed launch of the Bitcoin strategic reserve clearly shows that apart from confiscated Bitcoin, the government never intended to purchase any other assets. At the same time, the narrative of institutional demand has collapsed, as evidenced by the record outflows from ETFs. All the narratives have been shattered - every single one. Bitcoin maximalists have exhausted their tricks to attract new retail money into the bubble, but they have run out of tricks. Bitcoin is headed for a multi-year bear market, plunging to levels once thought impossible. If you have already invested, I strongly recommend you sell all your assets now, and if you wish, you can buy back in after an 85% or more decline.
Bitwise investment strategist Jeff Park said that at this stage, I think we will see a downside before breaking new highs. I always hope I'm wrong, but that's the loneliness and unrewarded nature of alpha trading, which is why you're following me.
Galaxy founder Mike Novogratz tweeted that BTC needs to reclaim $91,000 to attract momentum buying, and will continue to trade in the $75K-$90K range until then. The rest of the crypto market also needs to see retail participation. But I know this - every time you think they've disappeared, they come back. To see a market reversal, we need to see that. ETH should defend $2K, and it must defend $2K. In the medium to long term, this is still very bullish. But in the short term, there are many offsetting forces at play.
