Bitunix analysts pointed out that there was a significant correction in the cryptocurrency market after the Federal Reserve’s December 2024 interest rate decision. The Fed has signaled that the pace of interest rate cuts will slow in 2025, with only two rate cuts possible throughout the year. Chairman Powell emphasized after the meeting that inflation is still above the 2% target and the Fed will prudently adjust policies based on economic data. It may take one to two years to achieve the target.
On the same day, the Bitcoin spot ETF saw a net outflow of US$671.9M, causing the price of Bitcoin to plummet nearly 10% in a single day. Although President-elect Trump proposed to establish a strategic reserve of Bitcoin and may use confiscated Bitcoin as a reserve asset, Fed Powell stated that he has no intention of holding Bitcoin and that relevant policies should be decided by Congress. This comment cooled the market's expectations for the policy, and the cryptocurrency market immediately experienced fluctuations.
In addition, the U.S. stock market and bond market fell simultaneously after the interest rate decision. Investors are worried that in a high inflation environment, the Federal Reserve may maintain high interest rates, which will put pressure on economic growth. U.S. economic forecasts for 2025 show that GDP growth may slow to 2.1%, core PCE inflation may be 2.5%, while the labor market remains solid.
Bitunix analysts suggest that against the backdrop of increased policy and market uncertainty, investors need to pay close attention to regulatory developments and economic data and adopt flexible strategies to respond to market fluctuations.
