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Hello everyone! This is your blockchain friend, a senior analyst who analyzes hot news in the blockchain market easily and entertainingly. Today's market felt like a rollercoaster ride. From the US Federal Reserve's (Fed) decision to freeze interest rates to the shock in the AI semiconductor market, a lot of news has poured out. But we can't avoid it just because it's complicated, can we? From now on, let's coolly analyze based on facts and figures, and together consider future investment strategies!
The US Federal Reserve has frozen its benchmark interest rate for the fifth consecutive time, maintaining it between 3.50% and 3.75%. However, a crucial point here is that three board members advocated for an interest rate hike. This can be interpreted not as a simple freeze, but as a 'hawkish freeze'. The Fed Chair stated, "It is difficult to resolve five years of high inflation in a short period, but the 2% inflation target remains unwavering," and mentioned that additional rate hikes could be part of the solution if inflationary pressures persist.
The market was greatly disappointed by this news. All major US stock indices – the Dow Jones, S&P 500, and Nasdaq – fell sharply, and notably, the 30-year US Treasury yield surged past 5.2%. Risk appetite significantly contracted. International gold prices saw a brief relief rally after the Fed's decision, but overall market tension remains. The domestic stock market also suffered a significant shock, with the KOSPI triggering circuit breakers for two consecutive days, compounded by the AI semiconductor shock.
This macro environment directly impacted the cryptocurrency market, including Bitcoin. The Fed's uncertainty and geopolitical tensions stemming from the Middle East resulted in $526 million evaporating from Bitcoin spot ETFs, and the Bitcoin price failed to hold the $65,000 level. This is a clear signal of how significant a burden the fear of interest rate hikes places on risk assets.
Many analyses suggest that the Bitcoin market is entering the final stages of a bear market. Historically, Bitcoin bear markets have lasted an average of 383 days, and we are currently on day 297. CryptoQuant predicted that the final bottom could form around $51,336. Long-term holders are consistently accumulating Bitcoin, and there are positive signs such as funding rates in the perpetual futures market showing patterns similar to those just before past rallies.
However, short-term downward pressure cannot be ignored. Warnings are emerging that Bitcoin could plunge by 20% after the Fed's hawkish freeze, and there's a risk of $360 million worth of long positions being forcibly liquidated if it breaks below $63,289. Bitcoin trading volume has also shrunk to its lowest level since 2023, indicating a strong wait-and-see attitude in the market.
From a long-term perspective, Joe Burnett, VP of Strive, a publicly traded company specializing in Bitcoin strategic accumulation, predicted that Bitcoin could reach $11 million in 10 years. Key factors cited include AI-driven technological deflation, central bank liquidity expansion, fixed total supply, and halving events. However, MicroStrategy is reportedly halting Bitcoin purchases and making efforts to prevent forced sales, suggesting that the situation for corporations is not easy.
Ethereum has shown relatively robust performance despite the recent market downturn. Ethereum spot ETFs saw net inflows of 13.6 billion KRW for two consecutive days, and Morgan Stanley's Ethereum product attracted $5 million on its first day, indicating sustained interest from institutional investors. Morgan Stanley even predicted that "Ethereum will surpass Bitcoin."
The news that BNY Mellon is introducing blockchain into its $59 trillion asset network and is on the verge of launching tokenized funds is very positive for the Ethereum ecosystem. Ethereum Institutional, dedicated to institutional adoption, has also secured its first ecosystem investment, suggesting an acceleration of Ethereum's integration into the mainstream financial system. This is a good sign that Ethereum's fundamentals are strengthening.
For Ripple (XRP), the passage of the US cryptocurrency market structure bill, the 'CLARITY Act,' appears to be a crucial turning point. Some predict that XRP could rise to $1.35 if the CLARITY Act receives bipartisan support. The XRP Ledger is also making technological advancements by upgrading its security system. Improvements in Flare Network's DeFi functions are also cited as a driving force for XRP's rebound.
However, news that Grayscale's CEO sold XRP spot ETFs adds uncertainty to the market. Resolution of regulatory uncertainty and spot ETFs could be key drivers for XRP's next bull run, but currently, selling pressure and uncertainty coexist.Stablecoins: The Future of Cross-Border Payments
Visa CEO stated that they will maintain a multi-coin, multi-chain strategy without leaning towards specific stablecoins. This is interpreted as an acknowledgment of the diversity of the stablecoin ecosystem and a focus on infrastructure support. Tether's USAT expanding to the Celo network and its move to preempt the real-world asset tokenization market in Kenya demonstrates the widening practical uses of stablecoins.
The UK financial authorities analyzed that stablecoins have the greatest value for cross-border payments in the short term. This is evidence that blockchain technology can solve the inefficiencies of the existing financial system. However, a Circle executive pointed out that among the top 50 stablecoins, only USDC, USDG, and EURC comply with Europe's cryptocurrency regulation MiCA, emphasizing the importance of regulatory compliance.
Hyperliquid (HYPE) plunged 8% weekly, threatening the $50 support level, due to ETF fund outflows and rumors of large-scale selling. However, Cellini Capital denied the large-scale selling rumors, stating it was for ecosystem utilization, and an address presumed to be a16z was seen withdrawing HYPE, seemingly building positions. The acquisition of HYPE as a strategic asset by Japanese listed company Iole is also noteworthy. Grayscale still considers HYPE undervalued and maintains a positive outlook, as it generates actual cash flow.
Meanwhile, Dogecoin (DOGE) saw its bullish betting ratio enter an overheated zone, and Shiba Inu (SHIB) faced a crisis of its exchange holdings falling below $400 million, indicating that some memecoins are under correction pressure. ZEC is in an emergency to defend the $460 support level due to decreased on-chain usage and futures market outflows. Conversely, Web3 payment layer Aeon (AEON) surpassed $470 million in cumulative on-chain transaction volume, accelerating the expansion of its AI agent payment infrastructure.
The US cryptocurrency market structure bill, the 'CLARITY Act,' remains a hot potato. Senator Cynthia Lummis emphasized that the bill is "beneficial to both consumers and the nation," and major Wall Street firms including Block, BlackRock, Franklin Templeton, DCG, and Solana Policy Institute are urging its passage. Even up to 10 Democratic senators have hinted at supporting the bill, raising expectations for bipartisan support.
However, the White House cryptocurrency lead stated that the Blockchain Regulatory Certainty Act (BRCA) amendment, integrated into the CLARITY Act, differs from the White House's position, causing the bill's passage probability to drop to the 30% range. Criticism of potential crypto conflicts of interest within the Trump family has also emerged as a last-minute variable. With the Senate recess approaching, intense behind-the-scenes negotiations, including coordinating ethical clause compromises, are underway, and the outcome could significantly alter the market's direction.
Domestically, discussions on virtual asset regulation and taxation are also active. A majority of virtual asset businesses are facing a survival crisis due to not meeting debt ratio requirements, and the ruling and opposition parties are clashing over the implementation of virtual asset taxation in 2027. The government's stance is to proceed with taxation as planned, but the National Assembly's Finance Committee suggested that careful consideration is needed regarding the abolition of taxation. As South Korea accelerates the enactment of a basic law for virtual assets, including Korean Won stablecoins, a clear regulatory framework must be established as soon as possible.
There is also positive news. Hungary abolished the obligation for cryptocurrency transaction verification and issued its first MiCA license, leading the way in European regulatory clarity. The launch of RL1, a joint blockchain network for regulated financial markets and tokenized assets by 10 European financial institutions, is also noteworthy. This demonstrates that blockchain technology is increasingly integrating deeper into traditional financial systems.
Blockchain technology is now rapidly expanding beyond cryptocurrencies into traditional finance and AI sectors. BNY Mellon is adopting a blockchain-based transfer agency system for its $8.6 trillion fund services business to manage investor ownership on-chain. A Morgan Stanley executive stated that the shift to tokenized assets is "ending the traditional 9-to-5 banking era," foreshadowing the 24/7 nature of financial markets.
MoonPay launched its generative AI payment service 'Paybox,' introducing a new paradigm where AI prepares payment procedures and users provide final approval. Cryptocurrency exchanges are also diversifying their business into tokenized traditional financial asset markets such as stocks and precious metals to enhance competitiveness. This convergence of blockchain and AI is a massive driving force that will revolutionize the future of finance.
However, the AI-related stock market is currently in a state of 'shock.' SK Hynix's stock price plummeted amid forecasts of slowing performance, and Micron also crashed. Nvidia (NVDA) is struggling to see its stock price rise despite record-high earnings, and SpaceX (SPCX) stock has plunged 50% below its IPO price. Prominent economist Peter Schiff warned that SpaceX's crash is "a sign of the AI bubble bursting," and Jim Cramer compared the AI stock rotation to "a déjà vu of the 2000 dot-com crash."
Due to this instability in the AI market, a Gemini co-founder argued, "The AI investment cycle is over. It's time to move funds back into the soundest money in the world: Bitcoin (BTC) and Zcash (ZEC)." Meta (META) is also expected to see significant stock price fluctuations due to AI investment burdens, indicating that even big tech companies are experiencing cash flow crises related to AI investments. Conversely, Apple (AAPL) surged past a $5 trillion market capitalization without AI investment burdens, rapidly emerging as a refuge in a falling market.
Today, we have explored the Fed's hawkish freeze, the upheaval in the AI market, and the complex currents of the cryptocurrency market. In the short term, macro-economic uncertainty and AI market corrections may burden the cryptocurrency market. Bitcoin spot ETF outflows and the weakness of altcoins clearly demonstrate this market anxiety.
However, at the same time, blockchain technology is deeply penetrating traditional finance, and major altcoins like Ethereum continue to attract institutional investors. The regulatory environment is also gradually moving towards clarity amidst uncertainty. Especially the potential for stablecoins in cross-border payments and the growth of the tokenized asset market are key trends we should focus on going forward.
In such a turbulent period, we must guard against unfounded optimism and always coolly analyze the market based on facts and figures. Rather than being swayed by short-term volatility, we should believe in technological advancement and market maturity from a long-term perspective and formulate wise investment strategies. If we remain steadfast and adhere to principles, we can certainly seize new opportunities even in this tumultuous market! Let's stay strong together!
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