BTC once fell below 90,000. How will the market go after the United States completes the transfer of supreme power?

Jessy, Golden Finance

At around 22:00 on January 13, Beijing time, Bitcoin fell below 90,000. According to OKX exchange market data, the lowest point was US$89,111. According to Coinglass data, as of 10 a.m. on January 14, the liquidation volume of the entire network in the past 24 hours was US$803 million, of which US$581 million was liquidated for long orders and US$221 million was liquidated for short orders. As of press time, Bitcoin has rebounded to exceed $97,000.

From January 7 to January 13, the market trend was mainly negative, with Bitcoin falling from US$102,000 to around US$89,000, a drop of about 12%. Even worse are the altcoins, especially some newly launched altcoins, while the likes of Swarms and Usual have fallen by 2/3 from their recent highs.

While the currency circle plummeted, the performance of U.S. stocks was also unsatisfactory. On the evening of January 13, Beijing time, the three major U.S. stock indexes collectively opened lower.

Macroeconomic data for the last month of 2024 have also been disclosed in recent days. January is also the last month of the Biden administration, and the United States is facing a transfer of power between the old and new governments. Therefore, financial markets are generally relatively volatile at this time.

And on January 20, when Trump takes office, will the crypto market stabilize and rise?

Fed rate cut may be less than expected, sending Bitcoin down for a week

Recently, the core factor affecting the continuous decline of the encryption market is the release of relevant macroeconomic data in the United States in December 2024.

In terms of employment data, first of all, it was announced on January 7 that 8.098 million JOLTs job vacancies in the United States in November were 8.098 million, which was higher than the expected 7.7 million. After this news was announced, Bitcoin began to stand above $100,000 again. started to fall.

In the following days, more relevant employment data was released. For example, in December ADP (the ADP report counts employment in the private sector) employed 122,000 people, lower than the expected 140,000, and the previous value was 146,000. people, reaching the lowest level since August 2024. Nonfarm payrolls increased by 256,000 in December 2024, far exceeding expectations of 160,000 and up from 212,000 in November. The unemployment rate in the United States dropped slightly to 4.1% in December from 4.2% in November, which was 0.1 percentage points lower than expected. On the other hand, non-farm labor wage growth was slightly lower than expected in December. Average hourly earnings for the month increased by 0.3% month-on-month, in line with expectations, and increased by 3.9% year-on-year, which was slightly lower than expected.

Taken together, the above employment data show that the employment situation in the United States is relatively improving, which also indicates that the economy is improving, which has once again reduced the market's expectations for the Federal Reserve to cut interest rates this year.

The CPI data for December 2024 will be announced on the evening of January 15. The market currently predicts that the month-on-month growth rate of CPI in December will remain at 0.3%, and the year-on-year growth rate will increase from the previous value of 2.7% to 2.9%, which is 5 The highest level since August, core CPI inflation excluding volatile factors such as energy and food is expected to remain at 3.3% year-on-year, with month-on-month growth slowing to 0.2%.

If the CPI continues to rebound slightly as expected, it will make the Federal Reserve's interest rate cut policy more cautious.

The sharp decline and continuous negative decline in the crypto market on the 13th was based on a reaction to the current macroeconomic situation in the United States.

Moreover, U.S. bond yields are also rising, with the benchmark 10-year U.S. Treasury bond yield closing at 4.772% last Friday, the highest level since November 2023. This has also caused many investors to sell high-risk assets and turn to the relatively safe bond market.

The U.S. dollar index continues to rise, reaching 110. The strength of the U.S. dollar is often seen as a signal of the relative strength of the U.S. economy, and may also imply certain uncertainties in the global economy. In this case, investors' risk appetite will generally decrease. At the same time, the strength of the U.S. dollar has made U.S. dollar assets more attractive. In pursuit of higher returns and asset security, investors will transfer funds from risky assets such as cryptocurrencies to U.S. dollar assets.

Therefore, the release of the above macro data has led to the market's judgment that the Fed's next interest rate cut will be less than expected. This is the root of market panic, and high risk aversion has caused people to sell crypto assets.

But on the other hand, in the face of the transition between the old and new governments, it is normal for the financial market to experience large fluctuations.

January 2025 is the last month of the Biden administration. In such a political background, how reliable is the economic data released by it?

After falling rapidly on the 13th, the market also rebounded quickly. As of press time, Bitcoin has rebounded to more than $97,000.

In the short term, the market will look at related encryption policies after Trump came to power, but in the long term, we will still look at the macroeconomics.

Currently, as Trump comes to power, the industry generally believes that his official inauguration will boost the encryption market. Especially if he makes encryption-related remarks on the day of his inauguration, it will greatly stimulate the encryption market sentiment. Because Trump has promised to make the United States the global cryptocurrency capital and supports the establishment of a strategic Bitcoin reserve, among other things.

According to the "Washington Post" report, David Sacks and the Trump transition team are working closely with encryption industry leaders to develop legislative strategies. Trump is expected to sign an executive order on his first day in office, which may involve "debanking" and abolishing A controversial crypto accounting policy that requires banks to include digital asset holdings on their own balance sheets.

As the policies promised by Trump are implemented step by step, it will undoubtedly boost market confidence and cause funds to flow into the encryption market.

Some people believe that if some of the promises made by Trump during the previous campaign are unable to be fully implemented due to practical reasons, or even if cryptocurrency is not mentioned on the day of inauguration, this will undermine investor confidence and lead to short-term losses. The decline in cryptocurrency prices.

But overall, the Trump administration has always been a crypto-friendly government, and the policies related to virtual currencies it issued during his term are definitely relatively friendly, and are generally beneficial to the development of the crypto industry.

Another factor that will affect the cryptocurrency market is undoubtedly macroeconomic factors, which are also the most uncertain factors at present. After Trump took office, the relevant economic policies he introduced may also make the global economy more uncertain.

When Trump campaigned, he advocated bringing manufacturing back to the United States, and to achieve that goal, a weaker dollar was needed. In this way, the price of commodities priced in US dollars will be relatively reduced, thereby enhancing the competitiveness of export commodities and increasing export volume. A weaker dollar will make cryptoassets more attractive as an alternative asset.

On the other hand, Trump is also likely to promote trade protectionism and impose tariffs on imported goods to protect domestic industries in the United States. This trade protection tendency may trigger trade frictions, which will put the global economy and trade order at risk. Great uncertainty, and the unstable global political and economic situation will be negative for cryptocurrencies.

On the other hand, according to the recently released macroeconomic data in the United States, many institutions have lowered their forecasts for further interest rate cuts in the United States. But what will be the actual rate cut in the United States in 2025? There is also great uncertainty.

The first is the fulfillment of Trump's own promises during the campaign such as tax cuts and lower borrowing rates, as well as some trade protection measures and adjustments to immigration policies. There is a high probability that interest rates will be cut to achieve them. But on the other hand, , with the introduction of Trump's set of policies, he is actually trying to find ways to promote the development of the US economy, which has also brought about a further rise in inflation. In order to control inflation, the Federal Reserve may choose to keep interest rates unchanged or even raise them.

However, in order to control inflation, the Federal Reserve may keep interest rates unchanged or even raise interest rates. This is a later matter. Within a month or two, what is more certain is that after Trump takes office, he will vigorously stimulate the development of the U.S. economy, and this requires In conjunction with loose monetary policy.

If Trump fulfills his promises to the crypto market when he takes office, I will be optimistic about the crypto market at least within a month after Trump takes office.