BTC briefly fell below $69,000. Where is the promised new high?

Original | Odaily Planet Daily ( @OdailyChina )

Author | Fu Howe ( @vincent 31515173 )

Last night, the crypto market began to show a downward trend. OKX market data showed that BTC briefly fell below 69,000 USDT, temporarily reporting 69,383.9 USDT, a 24-hour drop of 5.18%.

Under the influence of BTC, altcoins led by Ethereum also experienced a certain degree of correction. As of the time of writing, ETH is temporarily reported at 2505 USDT, a 24-hour drop of 5.69%; SOL is temporarily reported at 167.88 USDT, a 24-hour drop of 4.82%; BNB is temporarily reported at 576.5 USDT, a 24-hour drop of 3.13%; OP is temporarily reported at 1.604 USDT, a 24-hour drop of 5.92%.

Affected by the overall downward trend, the total market value of cryptocurrencies is facing a certain shrinkage. According to CoinGecko data, the total market value of cryptocurrencies has dropped to 2.43 trillion US dollars, a 24-hour drop of 5.7%. However, the trading enthusiasm of crypto users has not weakened. Todays panic and greed index is 75, and the weekly level change is still in greed. In addition to todays drop of 2 points, the index has been rising for the rest of the time.

In terms of derivatives trading, Coinglass data shows that in the past 24 hours, the entire network has been liquidated for $275 million, of which the vast majority are long orders, amounting to $246 million. In terms of currencies, BTC liquidated $86.5734 million and ETH liquidated $44.8059 million.

Just two days ago, BTC rose all the way to 73650 USDT and then fell back, only about 130 USDT away from the previous high of 73787.1 USDT in March this year. At that time, all institutions were bullish, and the options market was dominated by selling call options . After all, will the new high come, and when will it come?

Reason for the decline: Uncertainty about the Fed’s interest rate cut expectations later this year

The apparent reason for the poor market performance is that Bitcoin failed to break through its previous high on October 30 and then began to fall. Market sentiment became more uncertain about the future price of Bitcoin, causing investors to become cautious, which in turn exacerbated the selling pressure in the market.

The reason behind this may be: uncertainty in the Fed’s expectations for a rate cut.

The recent decline in the crypto market is closely related to the expected changes in the Fed’s future interest rate cuts. Although CME’s “Fed Watch” predicts that the Fed will cut interest rates by 25 basis points in November with a probability of 96.1%, this expectation faces many uncertainties.

Among them, the rebound in US inflation is an important factor affecting the Feds policy. Data showed that the core PCE price index rose 0.3% month-on-month in September and 2.7% year-on-year. This figure is higher than the 2% target set by the Fed, showing that inflationary pressure still exists, which may cause the Fed to suspend interest rate cuts at future policy meetings.

• Economic performance: Although the economy is running relatively well and consumption remains strong, the high core PCE means that the Fed will be more cautious in cutting interest rates. Peter Cardillo, chief market economist at Spartan Capital Securities, said that the hint of rising inflation has been confirmed in the latest data and may cause the Fed to pause in cutting interest rates.

• Outside view: BlackRock CEO Larry Fink and SkyBridge Capital founder Anthony Scaramucci both said the Fed may not cut rates as fast as the market expects, with another 25 basis point cut not expected until 2025.

Overall, the uncertainty of the Feds interest rate cut expectations, especially the pressure of rising inflation, is the main reason for the recent decline in the crypto market. The fluctuation of market sentiment and the interpretation of the Feds future policies will continue to affect the trend of crypto assets.

What’s next? The upcoming US election may determine the future direction of the crypto market

The US election is coming, and its results may have a profound impact on the crypto market. Nikolaos Panigirtzoglou, an analyst at JPMorgan, pointed out that Trumps victory will further enhance Bitcoins momentum, especially among retail investors, forming the so-called downtrade phenomenon. Retail investors are more actively buying Bitcoin and gold ETFs, and even showing strong impulse in investing in meme and AI tokens, which have performed relatively well in terms of market value.

Matt Hougan, chief investment officer of Bitwise, believes that regardless of the election results, the regulatory environment for Bitcoin is improving, which is positive news for the crypto market. The entry and adoption of institutional investors, as well as the continuous inflow of ETF funds, are all positive signals for the market. In the short term, the crypto market is more inclined to Trumps victory, which will have a greater impact on Ethereum and other altcoins.

Data from Matrixport shows that when Trump was first elected in 2016, the price of Bitcoin was around $700, and it rose sharply within his first year in office. Although a single data point is not enough to establish a trend, market optimism remains high. If Trump is re-elected, it is expected that he may relax regulations on the crypto market, which will drive Bitcoin further up.

Current market dynamics show that the prediction market Polymarket estimates Trumps chances of winning as high as 66.5%, which may be one of the largest lead margins in history. At the same time, the demand for Bitcoin continues to grow, and the inflows of many ETFs have begun to increase recently.

In general, the approaching US election is the most direct factor affecting the current crypto market. The market would rather see Trump win the election and fulfill his promise to crypto voters.

In addition, CZ, who has not been seen for a long time, also injected confidence into the market from the perspective of historical replication last night. He said: Historically, Bitcoin has experienced a clear four-year cycle. The past bull markets occurred in 2013 and 2017, while 2012 and 2016 were recovery years. Based on this pattern, the market generally believes that 2024 will also be a recovery year. Although the specific situation in the future is still unclear, in the long run, the encryption industry is still considered optimistic. In view of this, the future of the encryption market is still full of hope.