Crypto Weekly - Fed Lowers 2025 Rate Cut Outlook, Bitcoin Drops Below $100,000

Last Week's Review

Early Thursday morning last week, the Federal Reserve cut interest rates by 25 basis points to a range of 4.25%-4.50%, aligning with market expectations. At the same time, the Fed released its latest economic projections, raising the 2024 GDP forecast from 2.0% to 2.5% and the 2024 core PCE forecast from 2.6% to 2.8%. Additionally, the dot plot revised the 2025 rate cut expectation down to two cuts (previously four). Chairman Powell stated during a press conference that officials must see more progress on inflation before further rate cuts. This sparked pessimism among crypto bulls, who fear significantly reduced liquidity next year, negatively impacting risk assets (US stocks, cryptocurrencies), leading to sharp short-term declines. Bitcoin plunged over $6,000 at one point.

However, Trump’s nomination of crypto-friendly Paul Atkins as the SEC chair and stablecoin supporter Lutenick as Commerce Secretary, as well as appointing Hines—backed by a pro-crypto political action committee—as the Executive Director of the Presidential Digital Asset Advisory Council, has been interpreted as a move to strongly support cryptocurrency economic innovation in the future. This helped stabilize sentiment among crypto bulls over the weekend, narrowing Bitcoin's decline into a high-level consolidation rather than a reversal.

Additionally, the National Center for Public Policy Research (NCPPR), a U.S. think tank, submitted shareholder proposals urging Microsoft and Amazon to consider investing in Bitcoin. Reports also indicated that El Salvador's president has ramped up daily Bitcoin purchases, with a mid-term target of adding 20,000 BTC. These factors contributed to Bitcoin's temporary stabilization.

[This Week and Future Outlook]

This week marks the Christmas holiday in Western countries, which will lead to early closures in U.S. financial markets, reducing volatility across financial products. Cryptocurrencies may also experience narrow-range trading as a result. However, attention should be paid to whether Trump uses the holiday period to nominate more crypto-friendly personnel to his cabinet, which could lead to surprising moves in the crypto market.