Bloomberg Analyst: Bitcoin May Fall Below 84,000 Magnesium! Bulls were ambushed by the "hawkish interest rate cut" and the Christmas market was ruined
The Federal Reserve’s interest rate cut triggered a leverage stampede on Bitcoin, with long positions liquidating to $380 million in 24 hours. Several analysts pointed to reduced liquidity as a possible downturn in late December.
(Preliminary summary: Bitcoin liquidity has been reshaped by "old indicators" or has failed, and the market needs a new set of glasses)
(Background supplement: Bitcoin surged higher and fell below $91,000. What did Bauer say after the Fed cut interest rates by 1 yard? )
"Sell the News" happened again in the Bitcoin market. The Federal Reserve cut interest rates by 25% as scheduled in the early morning of December 11. However, Bitcoin fell sharply after briefly touching $94,500. Within 24 hours, long positions were liquidated as high as $380 million, while short positions were only $138 million. The domino effect of more leverage killing more has quickly cooled the market’s expectations of hitting $100,000 by the end of the year.
Leverage cleaning: above 90K becomes a bull trap
On Tuesday and Wednesday, the price twice tried to break through 94,000 US dollars. The seemingly breakthrough was actually a fake move. After retail investors chased the price higher, they were immediately forced to liquidate their positions. FxPro analyst Alex Kuptsikevich told Coindesk,
Although Bitcoin has hit a local high, the overall market value has always been stuck at US$3.32 trillion, and there has been no new capital inflow. In the short term, it is just a battle between chips on the market.
Hawks cut interest rates: Liquidity expectations were met
The Federal Reserve made its decision to cut interest rates in a policy statement, but the latest interest rate dot plot shows that the number of interest rate cuts may be reduced in the next two years. The Trump administration's push for fiscal expansion in its first year in office has led to a rebound in inflationary pressures, and the attitude of policymakers has changed from dove to hawk. The QCP Capital report stated:
Reduced liquidity and imbalanced positions have caused Bitcoin to fluctuate between US$84,000 and US$100,000, and the unilateral market momentum has exhausted.
The global crypto market capitalization fell back to US$3.16 trillion. Although Ethereum formed a neck and shoulders pattern technically, with a theoretical target of US$3,700, buying orders retreated significantly as Bitcoin led the decline. High-beta tokens such as Dogecoin and Solana have declined simultaneously, indicating that market risk appetite has cooled rapidly.
Bloomberg Intelligence strategist Mike McGlone bluntly stated that if liquidity continues to shrink, the "Christmas market" may be absent, and Bitcoin does not rule out falling below $84,000.
