The Federal Reserve holds steady, with $23 billion in options expiring soon; cryptocurrency market volatility may heat up again.

Policy Stability and Improved Regulatory Environment

The U.S. Federal Open Market Committee announced in the early hours of December 19th that the federal funds rate will remain in the 4.25%-4.50% range, aligning with market consensus. Notably, the dot plot’s expectation for rate cuts in 2026 has been revised downward from three to two, indicating a more cautious stance from the Federal Reserve regarding subsequent easing policies. Powell reiterated at the subsequent press conference that current inflation levels remain above target, requiring more positive signals before further easing measures can be implemented.

On the regulatory front, the U.S. SEC recently issued a statement regarding broker-dealer custody of crypto asset securities, clarifying the applicability framework of Rule 15c3-3(b)(1) for crypto assets, paving the way for institutional compliance custody. Meanwhile, David Sacks, head of the White House’s artificial intelligence and cryptocurrency affairs, revealed that the Market Structure Bill is expected to be reviewed and amended by the Senate in January, with legislative progress accelerating.

Macroeconomic Data Shows Continued Cooling of Inflation

The US November unadjusted CPI annual rate was 2.7%, below the expected 3.1%, which is a positive signal. Core CPI also performed well, with an annual rate of 2.6%, better than the 3% forecast. These data further support market expectations of inflation gradually returning to normal.

Extremely Crowded Market Sentiment, Liquidation Risks Cannot Be Ignored

In the past 24 hours, the entire network experienced $547 million in liquidations, with long positions totaling $390 million. Bitcoin-related liquidations amounted to $183 million, and Ethereum liquidations reached $133 million.

From on-chain liquidation distribution, Bitcoin’s current price is in a dense area of long liquidations. The $86,500-$89,000 range above has accumulated a large number of 50x to 100x long positions. Once this critical level is broken, it could trigger chain reactions of liquidations, heading toward the $90,000 mark. In contrast, the short liquidation barrier below is very weak, with almost no strong support after falling below $84,000, indicating that market bullish sentiment is in a severely crowded state, and the risk of false breakouts and trap hunts should not be underestimated.

Regarding spot liquidity, in the past 24 hours, Bitcoin inflows to exchanges were about $87 million, outflows about $109 million, with a net outflow of $22 million, showing cautious off-exchange capital attitude.

Options Expiration Sparks New Wave of Volatility Expectations

Bloomberg’s latest report indicates that approximately $23 billion worth of Bitcoin options contracts will expire next Friday, which could serve as a catalyst for increased market volatility. In the context of already extremely crowded bullish sentiment, the settlement process of options expiration may amplify market fluctuations.

Diverging Capital Patterns and Mixed Institutional Attitudes

Bitcoin spot ETFs saw a net inflow of $457 million in the previous trading day, led by Fidelity’s FBTC with $391 million. Ethereum spot ETFs performed poorly, with five consecutive days of net outflows, totaling $22.43 million the day before. Solana spot ETFs saw a slight increase, with a single-day net inflow of $10.99 million.

According to reports, influenced by the December Fed rate cut and new accounting standards, crypto asset treasuries have experienced a net inflow of $2.6 billion over the past two weeks, reaching a seven-week high. A certain strategy firm purchased over 20,000 Bitcoin in two transactions within a week, amounting to nearly $2 billion.

On-Chain Ecosystem Continues to Evolve

Ethereum’s circulating supply on exchanges has fallen to its lowest level since 2016, indicating that short-term selling pressure is gradually easing. Developers plan to increase Ethereum’s gas limit from 60 million to 80 million in January, which is expected to further enhance network throughput.

In terms of cross-chain interoperability, JPMorgan has deployed JPM Coin on the Base blockchain, currently limited to transfers among whitelisted users. Near Protocol has also achieved a milestone by enabling NEAR tokens to cross-chain to the Solana network. Additionally, U.S. national bank SoFi has launched the USD stablecoin SoFiUSD, which is now live on the Ethereum mainnet.

Bitwise has officially submitted a registration statement for the Bitwise SUI ETF to the U.S. Securities and Exchange Commission.

Market Risk Alerts

A large Bitcoin holder recently deposited 5,152 BTC, worth about $445 million, into exchanges, which may indicate an intention to cash out. If large holdings are concentrated on exchanges, it could exert short-term downward pressure on prices.

Disclaimer: This analysis is generated by AI, with human verification for informational purposes only, and does not constitute any investment advice.