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Written by: 0xWeilan

After the Federal Reserve shifted its interest rate expectations last week, the price of BTC was revised downward along with the US stock market. With the start of the Christmas and New Year holidays this week, the global equity market has been trading light, still following the trend set last week.

BTC opened at $95091.15 and closed at $93563.35, recording a weekly drop of 1.60% with an amplitude of 7.91% and a significant drop in trading volume.

As the new year approaches, major global investment banks have released reports on their outlook for the economy and investment market in 2025. Overall, they tend to be optimistic, but there are also negative views.

Macro-financial and economic data

After the Fed changed its tone last week, the three major U.S. stock indexes adjusted sharply last week and gradually recovered this week, but fell again on Friday. Overall, the three major stock indexes all recorded weekly gains and are still in an upward structure, but the downward correction caused by the adjustment of interest rate expectations will take some time to end.

Last week, the US dollar index climbed to a high of 108.549, and then remained at a high level this week, closing at 108.029 US dollars. The US dollar continued to rise against the Japanese yen, but the Bank of Japan said it was still possible to raise interest rates in January. This further increased the uncertainty in January. If the Federal Reserve stops raising interest rates in January and the Japanese yen starts to raise interest rates again, then the US stock market will bear funding pressure.

Under pressure from the high US dollar index, spot gold fell 2.3% for the week.

Thanks to the optimism of major investment banks about the US economy and capital markets in 2025, with the US dollar index remaining high, the one-year Treasury yield showed a downward trend, while the ten-year Treasury yield continued to climb to 4.629.

Stablecoins and BTC Spot ETF

As the expectation of interest rate cuts was lowered, the capital trend in the crypto market suddenly changed direction. Last week, there was an inflow of $1.2 billion, but this week, there was an outflow of $289 million, and both the BTC Spot ETF and the stablecoin channel showed capital outflow.

This outflow of funds caused a sudden loss of buying power in the market. Although BTC surged above $99,000 this week, it eventually fell.

Selling pressure and selling

The BTC that changed hands between $90,000 and $100,000 was mainly profit-taking by long and short hands, and the peak of selling has passed. As trading sentiment weakened, the scale of selling also dropped significantly this week, and the current selling is comparable to that in September during the relay period. The weakening of the selling scale has kept the BTC price above $90,000.

In terms of floating profit, short-term holdings fell to 8%, while long-term holdings remained at a high of 285%. Therefore, the impact of long-term selling on the market is crucial. Observing the selling of long and short hands, we found that the scale of long-term selling has fallen to an extremely low level in the second half of the week, and short-term holdings have also reduced their purchases. The optimistic news is that the BTC inventory of centralized exchanges is still showing an outflow trend.

Based on the market structure information, we judge that the crypto market has basically completed its response to the Fed's interest rate shift. With the price adjustment, the selling has returned to a light state. The subsequent price trend depends more on the warming trading sentiment of US stocks and the allocation scale of BTC and ETH by mainstream US funds and institutions.

Cycle Indicators

According to the eMerge engine, the EMC BTC Cycle Metrics indicator is 0.75, and the market is in an upward phase.

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EMC Labs was founded by crypto asset investors and data scientists in April 2023. It focuses on blockchain industry research and Crypto secondary market investment, takes industry foresight, insight and data mining as its core competitiveness, and is committed to participating in the booming blockchain industry through research and investment, and promoting blockchain and crypto assets to bring benefits to mankind.

For more information, please visit: https://www.emc.fund