BTC has fallen for 4 days in a row, hitting the "Christmas bottom". Is it time to buy the bottom?

Original | Odaily Planet Daily

Author | Husband How

In the past week, the crypto market has continued to decline. Yesterday, after the news was released that the US Department of Justice was allowed to sell US$6.5 billion of seized darknet Silk Road Bitcoins, Bitcoin dropped from US$94,000 to below US$92,000, exacerbating market panic. Many officials from the Federal Reserve have also stated that they will adjust interest rate policies, suggesting that they will slow down the pace of interest rate cuts and implement tightening policies in 2025. At the same time, under the influence of the Los Angeles wildfires, some analysts pointed out that many wealthy people sold crypto assets to rebuild their post-disaster lives. Various market performances have made investors worried about the future of crypto prices.

Today, Russia also began selling 1,032 Bitcoins seized in the Infraud hacker group case. Affected by multiple factors, the crypto market fell again today.

• OKX real-time market conditions show that as of the time of publication, BTC has fallen below $92,000, temporarily trading at $93,760, a 24-hour drop of 0.45%;
• In addition to BTC, altcoins led by ETH also faced a sharp decline. ETH fell below $3,200 and is currently at $3,258, a 24-hour drop of 1.94%; SOL fell below $190 and is currently at $189.57. 24-hour drop of 1.4%;
• The market on the chain cannot escape this problem. The AI ​​Agent sector that was popular in the early stage has collectively made a major correction. According to the GMGN market, AI Agent tokens continue to fall. Among them: ai16z fell 23.05% in 24 hours, and the current market value is US$1.68 billion; FARTCOIN The 24-hour drop reached 31.09%, and the current market value is US$919 million; ZEREBRO 24 The hourly drop reached 41.92%, and the current market value is US$329 million.

Affected by the overall upward trend, the total market value of cryptocurrency has also fallen rapidly. CoinGecko data shows that the current total crypto market value has fallen to US$3.4 trillion, down 3.4% in 24 hours. Crypto users’ trading enthusiasm has also declined. Today’s Alternative Panic and Greed Index is at 50, with the level changing from greed to neutral.

In terms of derivatives trading, Coinglass data shows that the entire network has liquidated positions of US$375 million in the past 24 hours, including US$260 million of long positions and US$115 million of short positions. In terms of currencies, BTC liquidated the liquidation at USD 99.7435 million, and ETH liquidated at USD 6,966.81.

Below, Odaily Planet Daily analyzes the reasons for the recent market decline and future trends.

Multiple factors contributed to the market decline

**In the post-disaster reconstruction caused by the Los Angeles

wildfires, cryptocurrency has become the fastest way to realize cash.**

Recently, the raging wildfires in Los Angeles not only caused huge property losses to local residents, but also had a significant impact on the cryptocurrency market. According to Coinbase data, after the wildfires broke out, Bitcoin transaction volume from Los Angeles and surrounding areas surged, especially large-value transactions increased significantly, reflecting that some disaster-stricken families were eager to liquidate crypto assets to meet the financial needs of post-disaster reconstruction.

According to local real estate market analysts, many wealthy families hold cryptocurrencies such as Bitcoin and Ethereum, which are usually regarded as important parts of their investment portfolios. However, they have to quickly liquidate these assets due to the devastation of wildfires.

The head of a blockchain research institution in Los Angeles also pointed out that the market’s recent price fluctuations may be related to this large-scale asset sell-off. Especially in the context that people in the technology circle and high-net-worth individuals generally hold a higher proportion of crypto assets, the short-term capital demand surged after the disaster, intensifying the selling pressure in the market. Additionally, analysts warn that short-term selling behavior could have a negative impact on the stability of the cryptocurrency market.

**DOJ cleared to sell $6.5 billion in seized darknet Silk Road

Bitcoins**

The U.S. Department of Justice has been allowed to dispose of 69,370 Bitcoins related to the famous "Silk Road" case, with a current market value of approximately $6.5 billion. The news triggered market volatility, with some investors worried that the Bitcoin sale could conflict with Trump's plan to "build a Bitcoin reserve." However, Trader T said on the

At the same time, BitMEX co-founder Arthur Hayes said on the X platform that the "diamond hands" in the market are ready to buy the bottom at this time. CryptoQuant CEO Ki Young Ju also pointed out that about $379 billion entered the market last year, which is equivalent to about $1 billion every day. Therefore, the $6.5 billion of Bitcoin sold by the US government may be absorbed by the market in just one week, and investors do not need to overdo it. Worry. El Salvador President Nayib Bukele humorously said that maybe we all have the opportunity to buy Bitcoin at a discount.

Coindesk analyst James Van Straten believes that market concerns about the sell-off may be exaggerated. If these 69,370 Bitcoins are indeed sold, they will likely be sold in an orderly manner to obtain the best price possible. And the market has already anticipated this scenario, so it may have already priced in this potential risk.

Fed to slow down interest rate cuts in 2025

Recently, the Federal Reserve's monetary policy has changed, mainly reflected in the slowdown in the pace of interest rate cuts. Boston Fed President Collins said that given the current strong employment data and continued inflationary pressures, she believes the rate cut in 2025 will be smaller than previously expected by the market. Specifically, Collins supports the Fed cutting interest rates twice in 2025 instead of the four previously expected, a change that reflects the Fed's cautious approach to the economic situation.

The Fed faces challenges in the current economic environment with strong economic growth and inflation above 2%. Kansas Fed President Schmid pointed out that the current economic situation is close to achieving the dual goals of price stability and full employment. He believes that policy should remain neutral and interest rates should be close to long-term levels. Schmid emphasized that further adjustments to monetary policy will only be made if the data changes significantly.

In addition, Fed Governor Bowman mentioned in a recent speech that she supported last month's decision to cut interest rates and believed that this was the "final step" in the Fed's monetary policy adjustment. She pointed out that inflation risks still exist, so future monetary policy decisions will remain cautious.

The challenge facing the Fed is that while the economy is currently strong, it remains difficult to stabilize inflation at its 2% target. Schmid predicts that the Fed may not achieve this goal until 2026.

Judging from market expectations, according to CME "Fed Watch" data, investors generally believe that the probability that the Federal Reserve will maintain current interest rates unchanged in January 2025 is 93.1%. In the coming months, although the probability of interest rate cuts has increased, the market's expectations for the Fed's policy are relatively cautious.

Overall, the Fed's monetary policy has been adjusted and the pace of interest rate cuts has slowed, reflecting the Fed's prudent assessment of the current economic situation. Although future interest rate cuts are still likely to continue, the market expects this process to be slower and more cautious.

In 10 days, the crypto market trend may become clear

In the next 10 days, the cryptocurrency market may usher in a critical turning point. Although the recent market sentiment is still sluggish and investor confidence is slightly weak, there are multiple signs that the encryption market is expected to usher in a recovery in 2025. According to Reuters, industry insiders revealed that the cryptocurrency industry is actively lobbying the U.S. government, requiring the Trump administration to issue an executive order to establish a U.S. Bitcoin reserve within 100 days of taking office. The initiative aims to ensure the crypto industry has access to banking services, with plans to establish a dedicated cryptocurrency advisory committee. Sources expect that this order may be issued as early as January 20, 2025. This action may provide new policy support for the encryption industry and become a catalyst for market recovery.

On the other hand, the fundamentals of the crypto market remain strong. Data from IntoTheBlock shows that despite the overall market downturn, the trend of net outflows from centralized exchanges (CEX) continues. Data shows that more and more investors are choosing to hold assets for the long term rather than panic selling due to short-term price fluctuations. This phenomenon shows that there is still strong confidence in the market, and investors remain optimistic about the future growth potential of crypto assets. These behaviors reflect investors’ positive attitude towards the long-term development of cryptocurrencies and their expectation that the market will usher in a recovery after a short-term adjustment.

Additionally, the regulatory environment for altcoins is expected to improve in 2025. Andrew Baehr, managing director of CoinDesk, pointed out that altcoins will benefit from changes in the cryptocurrency regulatory environment in 2025, especially the SEC's possible relaxation of regulatory pressure on altcoins, which will provide more relaxed policies for the launch of more crypto projects. environment. Improved regulation will help attract more projects to the market and may further promote the healthy development of the market.

Finally, the integration trend of AI and cryptocurrency will become increasingly obvious. With the participation of Web2 giant companies, the underlying technology of AI in the field of encryption will be further strengthened. Members of industry leading companies such as Coinbase, Google, a16z, etc. have joined forces to launch the "Aiccelerate" project, a decentralized autonomous organization (DAO) aimed at accelerating the deep integration of cryptocurrency and artificial intelligence technology. AI technology is expected to play an increasingly important role in the development, transaction execution, risk management, etc. of blockchain projects, bringing more innovation and change to the encryption industry.

To sum up, despite the current difficult market environment, with the gradual implementation of policy support, the restoration of investor confidence and the promotion of AI technology, the cryptocurrency market in 2025 is expected to gradually recover and may usher in a new development peak. .