Is the bull market of Bitcoin facing a test?
The latest remarks from the Federal Reserve's number three person have doused cold water on the market's interest rate cut frenzy. Can Bitcoin withstand the test of tightening liquidity this time?
The latest remarks from Federal Reserve's Williams have indeed dealt a heavy blow to the market. He stated that the decline in the November CPI data may only be due to 'technical reasons', and actual inflation might even be underestimated by 0.1%, clearly emphasizing that there is no rush to adjust monetary policy. This hawkish statement instantly changed market sentiment.
But let's analyze calmly: does this really mean that Bitcoin is about to enter a crash mode? Not necessarily.
One, the truth behind the Fed's 'hawkish rate cut'
The Fed did indeed announce a 25 basis point rate cut in December, but this was interpreted by the market as a 'hawkish cut'. Why? Because the dot plot shows that the Fed expects to cut rates only once more in 2026, and three committee members directly opposed this rate cut decision. This indicates a significant internal divergence within the Fed regarding future policy paths.
Behind this cautious attitude is the Fed's tightrope walk between controlling inflation and stabilizing the job market. Powell has made it clear that future considerations for adjusting policy rates will be 'more cautious', and whether to cut rates in the future will be based on data rather than predictions.
The Fed's 'verbal hawkishness' is largely aimed at managing market expectations, avoiding overly optimistic rate cut expectations that could trigger market bubbles. Historical experience shows that the Fed's 'hard talk' phase is often a stage of market consolidation rather than the starting point of a trend reversal.
Two, the five-fold pressure tests faced by Bitcoin
Deutsche Bank's recent research report precisely points out the 'five-fold impact' that Bitcoin currently faces, which is completely different from past crashes driven mainly by retail speculation.
Record high correlation with tech stocks: The daily correlation between Bitcoin and the Nasdaq 100 index has reached 46%, proving its safe-haven attributes to be false. When the Trump administration threatened to impose 100% tariffs on Chinese goods, Bitcoin plummeted 5.6% on the same day, while gold rose by 1.03%.
Monetary policy uncertainty: There is a strong negative correlation between Bitcoin prices and the Fed's interest rates. During the 2022 rate hike cycle, the correlation reached -90%. Any signals about tightening monetary policy will directly hit Bitcoin.
Regulatory vacuum: The U.S. (Digital Asset Market Clarity Act) is stuck in the Senate, and no progress is expected before 2026. Regulatory uncertainty directly hinders the entry of institutional investors.
Institutional outflows: The institutional funds that once drove the Bitcoin bull market are now fleeing in the opposite direction. The U.S. spot Bitcoin ETF has recently seen large-scale daily net outflows, sharply contrasting with the massive inflows earlier this year.
Long-term holders selling: In the past month, long-term holders have sold more than 800,000 Bitcoins, the highest level since January 2024. The withdrawal of these 'ballast stones' has greatly increased the market supply.
Three, historical patterns vs. this unique context
Looking back at 2023, the Fed also made similar hawkish comments, but Bitcoin later rose from $20,000 to $40,000. Will history repeat itself this time?
The difference this time is that the background is more complex: Bitcoin has become more deeply integrated into the traditional financial system, and its price is influenced by more macro factors. The Fed is not only managing interest rates but is also conducting quantitative tightening, withdrawing liquidity from the financial system.
Data shows that Bitcoin's volatility has soared from a low of 20% in August to 39%. The Crypto Fear and Greed Index fell to 11 on November 21, marking the lowest level of the year, indicating that the market has entered an extreme fear state.
But in the long run, the fundamentals of Bitcoin have not been completely destroyed. Governments and central banks around the world are increasingly interested in digital currencies, as evidenced by recent initiatives in Luxembourg and the Czech Republic. The Trump administration may also pursue policies favorable to the cryptocurrency industry, despite facing real resistance.
Four, how should retail investors respond?
In light of the current market environment, I recommend adopting the following strategies:
Stay calm and avoid panic selling. The market often overreacts, creating buying opportunities. Bitcoin has currently risen above $90,000, equivalent to the price level of May 2025, indicating that the market has gradually digested some of the bearish sentiment.
Maintain a stable position structure. Hold Bitcoin and Ethereum spot; do not easily give up your chips. In times of market panic, quality assets often have the strongest recovery power.
If the market drops, you can accumulate in batches, but avoid investing all at once. Set reasonable position limits and do not change long-term investment strategies due to short-term fluctuations.
Pay attention to key support levels. Technical analysis shows that if Bitcoin breaks below the $94,000 key support level, it may further decline. However, if it holds that position, it is expected to rebound based on the accumulation of long-term holders.
Five, future outlook: Where is Bitcoin's way out?
Deutsche Bank's report indicates that Bitcoin's future stabilization and recovery depend on several key factors: regulatory clarity, stablecoin adoption, and central bank support.
Despite hawkish comments from Federal Reserve officials, the Fed is still in a rate-cutting cycle. Compared to other major central banks, the Fed has relatively more policy space. The Bank of England has announced a 25 basis point rate cut, while the European Central Bank has maintained its interest rates.
Bitcoin, as an emerging asset class, has moved from the margins into the realm of mainstream policy discussions. Powell's direct response to Bitcoin itself serves as an important psychological signal, indicating that Bitcoin has gained a market position that cannot be ignored.
Conclusion: After the storm comes the rainbow
The market is always full of noise, but trends often emerge from panic. The hawkish comments from Fed officials may indeed put pressure on Bitcoin in the short term, but they may not be enough to change the medium- to long-term trend.
True investment wisdom lies in distinguishing between short-term noise and long-term trends. Be greedy when others are fearful and remain rational during market panic; that is the winning strategy for cryptocurrency investment.
Do you think this time the Fed's hawkish stance will have a long-term impact on Bitcoin? Feel free to share your views in the comments!
Disclaimer: The content of this article does not constitute investment advice. The cryptocurrency market is highly volatile; readers should conduct independent research and bear risks before making any investment decisions.
Follow me@崎哥说币 #美国非农数据超预期 $BTC
