1. Los Angeles wildfires lead to cryptocurrency sell-off
Impact of wildfires: The Los Angeles wildfires caused huge property losses to local residents and also impacted the cryptocurrency market.
Transaction surge: Coinbase data shows that Bitcoin transaction volume, especially large-value transactions, increased significantly after the wildfires in Los Angeles and surrounding areas.
Analysis of the reasons: Local wealthy families and high-net-worth individuals sold off crypto assets such as Bitcoin and Ethereum due to the need for post-disaster reconstruction funds, which led to increased selling pressure in the market, price fluctuations, and affected market stability.
2. The U.S. Department of Justice’s sale of Bitcoin caused volatility
Approved to sell: The U.S. Department of Justice has been approved to handle 69,370 Bitcoins (market value $6.5 billion) related to the Silk Road case.
Market reaction: It caused market volatility as some investors worried about conflicts with Trump’s plan to “build Bitcoin reserves”.
Different views: Although some believe that it takes time from "approval" to "actual sale" and the market can absorb it, it still brings certain uncertainties to the market.
3. The Fed’s rate cut pace slows down in 2025
Policy changes: The Fed adjusted its monetary policy and slowed down the pace of interest rate cuts. Collins supports two rate cuts in 2025 instead of four.
Economic situation: Strong economic growth, inflation above 2%, close to the price stability and full employment targets, and policy remains neutral and cautious.
Market expectations: CME's "Fed Watch" data shows that the market expects that the Federal Reserve is likely to keep interest rates unchanged in January 2025, and future interest rate cuts will be slow and cautious.
4. Cryptocurrency market may pick up in the future
Policy expectations: The cryptocurrency industry is lobbying the U.S. government to establish Bitcoin reserves, which is expected to gain new policy support and become a catalyst for market recovery.
Strong fundamentals: IntoTheBlock data shows that despite the market downturn and net outflows from CEX, investors are still holding on for the long term and have confidence in crypto assets.
Improved regulation: It is expected that the regulatory environment for altcoins will improve in 2025, and the SEC may relax its regulations, attracting more projects and promoting market development.
Technology integration: There is a clear trend of integration between AI and cryptocurrency, with the participation of Web2 giants. The "Aiccelerate" project accelerates technology integration and brings innovative changes to the industry.
To sum up, although the current cryptocurrency market is difficult, with the development of factors such as policies, confidence and technology, it is expected to gradually recover and reach a new peak in 2025.
