The Federal Reserve may continue to cut interest rates this month.
Author: 1912212.eth, Foresight News
After the crypto market saw over $1.7 billion in liquidations in a single day on December 10th, the market's leverage has been largely unwound, and its health has returned to normal. Today, Bitcoin has once again surged above $100,000, up nearly 5% in 24 hours, while ETH has reached $3,900, up over 7% in 24 hours. The strong performance of Ethereum has led the Altcoin market to rally, with SOL up over 6%, SUI up over 30% to a new all-time high, and SEI up over 14% in 24 hours. In the AI sector, WLD is up over 16%, IO up over 23%, and ARKM up over 12%.
The Ethereum ecosystem, including DeFi, staking, L2, and stablecoins, has also seen a broad rally, with EIGEN up over 22% and ENA up over 21% in 24 hours. OP and ARB have also seen rallies of around 10%.
In terms of contract data, according to Coinglass, the 24-hour total liquidation was $228 million, with $154 million in short liquidations.
With the market rally, the sentiment has shifted from skepticism to optimism. What has happened in the market?
Significant Net Inflows into Bitcoin and Ethereum Spot ETFs
Bitcoin spot ETF data is an important indicator of off-chain capital inflows. While there have been 7 net outflows since November, the amounts have been relatively small.
In contrast, the number of net inflow days has far exceeded the net outflow days. Furthermore, since November 27th, the Bitcoin spot ETF has seen 9 consecutive days of net inflows, with capital continuing to pour in. The total net inflow into Bitcoin spot ETFs has reached $34.45 billion.
For Ethereum spot ETFs, they have gone from being shunned to seeing constant large net inflows.
Since November 22nd, the Ethereum spot ETF has seen 12 consecutive days of net inflows, with 3 individual days seeing net inflows exceeding $300 million. To date, the total net inflow into Ethereum spot ETFs has reached $1.89 billion, with a single-day trading volume exceeding $470 million.
The constant inflow of off-chain capital has played a significant role in the rise of Ethereum's price.
CPI Meets Expectations, the Fed Likely to Cut Rates Again This Month
Last night around 9 PM, the US November non-seasonally adjusted CPI year-over-year rate rebounded further, rising for the second consecutive month to 2.7%, in line with market expectations, reaching a four-month high.
As an important data point for the Fed's decision-making, although it has seen a significant increase, it is unlikely to prevent the Fed from cutting rates next week.
In recent months, the process of bringing the inflation rate down to the Fed's 2% target has actually stalled. However, the Fed is now more focused on the labor market. After being severely disrupted by strikes and hurricanes in October, job growth accelerated in November, but the unemployment rate has accelerated to 4.2% after holding steady at 4.1% for two consecutive months.
Goldman Sachs analyst Whitney Watson stated that today's CPI data has cleared the way for a rate cut next week. After the data release, the Fed will enter a "quiet period", and they still have confidence in the progress of disinflation, "We believe the Fed will continue to gradually ease monetary policy in the new year."
Yesterday, traders have already increased their bets on a Fed rate cut in December, with the swap market's probability of a rate cut this month rising from 86.1% before the data release to 96.4%.
If the Fed cuts rates again this month, it will undoubtedly increase market liquidity, which will be positive for the crypto market.
Trump-Linked Crypto Project WLFI Increases Holdings in Ethereum and DeFi Projects
As the next US president, Trump's crypto-related project WLFI has been closely watched by the market. Not only did Trump's son express belief that "BTC will reach $1 million, it's a better investment than real estate, and those who embrace crypto early will succeed" at a Bitcoin conference in the Middle East and North Africa.
Just a day later, WLFI took "concrete action". Lookonchain monitoring shows that over the past 10 hours, its wallet address has spent $10 million to purchase 2,631 ETH at an average cost of $3,801, $1 million to purchase 41,335 LINK at an average cost of $24.2, and $1 million to purchase AAVE at an average cost of $297.8.
As of now, LINK is priced at $26.7, up over 20% in 24 hours, and AAVE is priced at $332, up over 22% in 24 hours.
With Trump's immense influence, WLFI's capital dynamics will likely receive even greater attention and impact in the future.
Crypto Fund Ads Appear on Alipay Fund Homepage
Today, a crypto fund promotion ad appeared on the homepage of the Alipay fund section, sparking significant discussion in the community. Some users received ads for crypto funds on the homepage, with the content being "Global investment, crypto soaring, 10 RMB to start, get on board now".
After verification, the fund is Hwabao Overseas Technology C (QDII-FOF-LOF), which is a compliant model for investing in overseas assets, indirectly holding Coinbase stock and the ARK Invest Bitcoin spot ETF. The current daily purchase limit is 1,000 RMB per person.
As is well known, mainland China has always taken a strict regulatory approach to cryptocurrencies, prohibiting any exchange trading and token promotion. The appearance of this crypto fund promotion on the Alipay homepage for the first time naturally leads the market to speculate on the possibility of China opening up certain investment channels for the crypto market in the future.
Future Market Outlook
Weiss Crypto analyst Juan M Villaverde stated in an analysis of the recent sharp drop that $100,000 is a key level for Bitcoin, and if Bitcoin can break through and stabilize above this level, the current Altcoin rally will not end prematurely. However, if Bitcoin fails to hold above $100,000, the fate of Altcoins will likely return to their starting point.
Matrixport has emphasized that Ethereum's price is expected to rise significantly by 2025. The liquidity of the Ethereum spot ETF may reflect a reallocation or expansion of investment focus, coinciding with the typical start of a new fiscal year for US mutual funds on December 1st, and also reflecting the market's optimistic expectations for 2025. If this demand continues, Ethereum's price in 2025 may see a significant increase.
Bitwise is quite optimistic and predicts that Bitcoin, Ethereum, and Solana will reach new all-time highs by 2025, with the following target prices:
· Bitcoin: $200,000
· Ethereum: $7,000
· Solana: $750
The above analyses and predictions are not investment advice. In a bull market cycle, the market can be highly volatile, and investors need to pay attention to "risk control".
