The long-awaited interest rate cut is coming as scheduled, but the market is not as happy and encouraging as usual.

In the early morning of December 19, Beijing time, the Federal Reserve announced its last interest rate decision of the year, deciding to lower the target range of the federal funds rate by 25 basis points to 4.25%-4.50%. , successfully achieved the third consecutive interest rate cut. So far, the Fed’s cumulative rate cuts in this round of interest rate cuts have reached 100 basis points.

Even if there is selling of facts, the release of liquidity can be a huge good thing for the risk market, but this time, it is different. The U.S. stock market was the first to fall in respect and set the price with actions. Choice data shows that as of the close on the 18th Eastern Time, the Nasdaq fell 3.56% and the S&P 500 index fell 2.95%. The Dow Jones Industrial Average fell 1,000 points, or 2.58%, falling for the 10th day in a row, the longest losing streak since October 1974.

The crypto market followed suit, with Bitcoin once falling below $100,000 and hitting $99,000. ETH fell by as much as more than 7.2%, and the counterfeit sector even more so. It fell more than 10%. Why did this interest rate cut lead to such a result?

01

Hawk expectations trigger market panic, Powell slaps Trump in the face

Cutting interest rates is a good thing, but risks the market The hype revolves around two words - anticipation. While cutting interest rates, Federal Reserve Chairman Powell issued a long-lost hawkish statement, saying that the decision to cut interest rates in December was more challenging, but it was the "right decision" and emphasized that the Federal Reserve should be "more cautious" when considering adjusting interest rates in the future. 2025 Whether the Fed will cut interest rates next year will be based on future data rather than current forecasts, and the Fed will consider further interest rate cuts after inflation improves.

Compared with the relatively unanimous votes in previous decisions, this interest rate cut also ushered in differences. Cleveland Fed President Hammack voted against the interest rate resolution. It is believed that this interest rate cut should be skipped, reflecting that the resistance to interest rate cuts continues to increase.

In the economic outlook released by the Federal Reserve that day, the economic growth rate was raised and the unemployment rate was lowered, which also showed the Fed's hawkish stance. from latticeJudging from the chart, based on this outlook forecast, 10 of the 19 Federal Open Market Committee members believe that the federal funds rate target range will fall to between 3.75% and 4% by the end of 2025. Taking into account the so-called "more cautious", On a 25 basis point basis, it appears that the Fed will only be able to cut interest rates twice at most next year, a significant retracement from the four expected in September.

In this context, U.S. stocks, which have already digested the news of an interest rate cut in December, have generally There is nothing wrong with the decline. After all, whether there will be a soft landing in the market outlook remains to be considered. In fact, from a macro perspective, the severity is still within control. Despite the initial appearance of hawkish remarks, there is still consensus on an interest rate cut in 2025, but the neutral interest rate has increased. From the perspective of the Federal Reserve, this hawkish statement is likely to be an early warning in response to the uncertainty of Trump's subsequent administration, thereby leaving a certain amount of space to prevent the inflation caused by Trump's policy proposals.

Although expectations of interest rate cuts have a significant impact on risk markets, the disaster of cryptocurrency is even worse. Powell's words caused Bitcoin to fall by more than 5% and further crashed the encryption market. According to Coinglass data, as of 5 p.m., more than 260,000 people around the world have been liquidated in the past 24 hours, with $780 million in liquidated positions across the entire network, $661 million in long orders, and $118 million in short positions.

When Powell was asked at the press conference whether the Fed would establish a Bitcoin reserve, he replied, "We are not allowed to own Bitcoin." Federal Reserve The Federal Reserve Act regulates what the Fed can own, and the Fed is not seeking to change that. This is something that Congress should consider, but the Fed does not want to change the law.”

Powell’s attitude undoubtedly reflects his opposition to cryptocurrencies. The Fed does not consider including Bitcoin on its balance sheet and does not want to talk about the issue. During this term, Powell has made it clear that he will not resign, and Trump has no power to replace him.

Coincidentally, not long ago, Trump also published his usual "great theory", saying that he would do some great things in the field of cryptocurrency. When answering whether the United States will establish a Bitcoin similar to oil reserves, When asked about the strategic reserve of Bitcoin, he even bluntly said: "Yes, I think it will." Earlier, an anonymous transition team source also revealed that Trump hopes to have Bitcoin exceed 150,000 during his term. USD as cryptocurrencies are 'another stock market' for it", taking into account Trump's stated theory that "the stock market is everything", this news has a high degree of credibility.

And in December On the 17th, market news came again, saying that Trump plans to establish a Strategic Bitcoin Reserve (SBR) through an executive order and plans to use the Treasury’s Foreign Exchange Stabilization Fund (ESF) to purchase Bitcoin, and the asset has now exceeded 200 billion. USD. On the same day, Bitcoin Policy Institute drafted the full text of the executive order and said it will take effect after Trump takes office.

Spurred by a series of news, Bitcoin The reserve plan seems to be just around the corner, and the market has high hopes for it. The votes for Bitcoin reserves on Polymarket continued to increase from 25% to 40%. Yesterday, Bitcoin continued to rise, once hitting the new mark of 110,000 US dollars. But at this time. Powell's speech is undoubtedly a direct slap in Trump's face. If the Federal Reserve does not cooperate, it is obvious that the so-called reserves will encounter strong obstacles.

02

The Fed has no intention, Bitcoin reserves are difficult

Take the earliest "Bitcoin Bill" proposed by Senator Cynthia Loomis as an example. This bill requires the purchase of a maximum of 200,000 Bitcoins per year within 5 years, with a total amount of 1 million. According to the calculation of 100,000 US dollars per coin Calculated, excluding premiums in purchases, At least US$100 billion needs to be raised. In terms of detailed operations, the funding source can be composed of three parts. One is to use the Federal Reserve's treasury remittances, up to US$6 billion per year. This option is less likely because the Fed's books are still in the red. Over $200 billion, in fact, from 2023 9 The Federal Reserve has not remitted any funds to the Treasury since March. The second is to transfer it to the Treasury's general fund through the Federal Reserve's capital surplus account. This method has been used in the "FAST (Repairing American Surface Transportation) Act", but if it is used. Buying Bitcoin will most likely cause the public to question the independence of the Federal Reserve.

Compared with the first two, the third option is more feasible, which is to adjust the fair value of gold according to the market price and let the Federal Reserve market the proceeds from the official value of the Treasury’s gold reserves. According to the financial report released by the Federal Reserve, the Federal Reserve’s official Reserve assets are gold, special drawing rights and coins, of which,Gold refers to the Treasury Department's gold dollar-denominated certificate. Based on the official price of just over $42.22 per troy ounce, the nominal price is $11 billion. If calculated based on the market price of $2,700, the reserve will reach 703.4 billion. Dollar. In fact, looking at the three methods, no matter how to buy Bitcoin, the U.S. Treasury Department needs the full support of the Federal Reserve.

On the other hand, U.S. reserve assets need to be highly liquid to help maintain The US dollar serves as the international reserve currency and as a means of payment of last resort. From this perspective, Bitcoin, which is highly volatile, does not seem to meet the standards. If the United States purchases Bitcoin on a large scale, although it will further push up its price, it will also highly concentrate Bitcoin on one side. When it wants to sell in large amounts, the impact of slippage and volatility will be more than one and a half points, and may even eventually lead to Bearing this huge impairment loss, not to mention the rise of non-sovereign currencies will more or less weaken the global recognition of the US dollar.

For a variety of reasons, the Fed's dislike of cryptocurrencies is deeply rooted. Powell has expressed his opposition to cryptocurrencies many times before. It is worth noting that in this statement, Powell also left room for “this is something that Congress should consider.” That is, Congress can amend the bill to include Bitcoin in reserves, but considering the complex entanglements of interests and extensive The extent of the impact and the possibility of functional modification are minimal.

This is why the foreign exchange stabilization fund purchase is relatively more credible. Different from the Federal Reserve path, this fund is affiliated to the U.S. Treasury Department and has received approval from the president. After consent, the Ministry of Finance can bypass congressional appropriations and directly use ESF to conduct transactions in gold, foreign exchange and other credit and securities instruments, with relatively flexible uses.

Overall, although Trump has won both houses of Congress during this term, power has been highly concentrated, and he has actively announced relevant plans, but only From a probabilistic analysis, the possibility of Bitcoin becoming a U.S. strategic reserve asset is still very low. But for Trump, who takes an unconventional path, anything is possible. After all, from a realistic perspective, the United States has more than 210,000 Bitcoin holdings, ranking first in the world. If the reserves are partially replaced, the appreciation of Bitcoin can still play a very positive role in the debt-ridden United States.

03

Organizational FOMO trend Since then, the encryption market cannot escape path differentiation

In the long term, despite the brief encounter with Black Thursday, the prospects for the crypto market are still bright under the foreseeable regulatory benefits. For the upcoming 2025, institutions have also shown high optimism.

Bitwise gave clear price data in its 2025 forecast, saying that the number of Bitcoin holders will double, and Bitcoin ETFs will also usher in a new era. With more inflows, Bitcoin will reach US$200,000. If the strategic reserve is realized, there will be no upper limit and the price will reach one million US dollars in 2029. Ethereum will undergo a narrative shift in 2025, driven by Layer 2, stablecoins, and tokenization projects, reaching $7,000, with Solana pointing directly to $750. In addition, it also stated that 2025 will be the first year of IPOs for crypto companies, and Coinbase will also become the largest trading broker.

VanEck’s expectations are clearer. He said that the cryptocurrency bull market will continue to develop in 2025 and reach its first high in the first quarter. At the peak of this cycle, Bitcoin’s price is expected to be around $180,000, while Ethereum’s price will be over $6,000. Other well-known projects such as Solana and Sui may break $500 and $10 respectively. After the first quarter, the price of BTC is expected to correct by 30%, while the decline of altcoins is even greater, reaching 60%. The market will consolidate in the summer, and will then rebound in the autumn, with major tokens regaining growth. A return to previous all-time highs before the end of the year.

Compared to Bitwise, VanEck is more optimistic, believing that Bitcoin reserves will become a reality, and the federal or at least one state (such as Pennsylvania, Florida or Texas Sri Lanka) will establish a Bitcoin reserve and also expects the number of resources to be mined to increase from the current 7 to double digits. On the other hand, VanEck also predicted the subdivisions, believing that stablecoins, DeFi, NFT, Bitcoin Layer-2, RWA, and AI agents will all usher in rapid development. By 2025, the transaction volume of DEX will exceed 4 trillion US dollars, accounting for 20% of CEX spot trading volume; NFT trading volume reached 30 billion US dollars; Bitcoin Layer-2 locked position (TVL) reached 100,000 BTC; the total value of security tokenization exceeds $50 billion; the on-chain activities of AI agents will also exceed 1 million.

Presto’s prediction is also consistent, indicating that the price of Bitcoin will reach $210,000, and ETH/The BTC ratio will rebound to 0.05, Solana breaks above $1,000 and sees a sovereign or S&P 500 company taking Bitcoin into treasury reserves.

Judging from last year’s predictions, VanEck’s prediction success rate is about 56.6%, and Bitwise is also about 50%. Therefore, from an institutional perspective, the credibility Pretty good. Overall, around 200,000 is the peak expected by institutions for Bitcoin in the next year, while Ethereum is around US$6,000-7,000. Institutional bullish sentiment is very strong.

However, judging from the current obvious path differentiation, it seems that everything is a good bull market, but risks are still everywhere, especially altcoins, which are most vulnerable to liquidity influence. In fact, even today, many altcoin holders will find that the price of the currency has not even returned to the previous bear market level.

The lack of market liquidity can also be seen from Binance's new currency. The currency listing effect of "Universe Big Exchange" is continuing to weaken, and the rise and fall have become Main theme. According to Gyro Finance statistics, as of December 19, the average decline of the 10 new tokens on Binance since November has exceeded 57.94%. Taking PENGU, which was just listed on December 17, as an example, it soared to 0.07 and then quickly retreated. , now reported at 0.033, a decrease of 51.81%.

It is precisely because of market difficulties and numerous doubts that Binance Wallet recently launched Binance Alpha function hopes to activate the transaction volume by opening up potential tokens with low market value, stimulate the wallet ecology, and maintain the leading advantage in the fierce market competition. However, from the current point of view, the short-term platform activity has increased significantly, and the long-term effects still need to be discussed.

From this point of view, in this bull market, holding mainstream tokens may be the best choice. Currently, the encryption market has rebounded, with Bitcoin currently trading at $101,652 and ETH at $3,674.