Weekly Roundup: Crypto Market Reacts to Fed Rate Cut with Correction
Global Market Highlight
On Thursday, December 19, the Federal Reserve lowered its benchmark interest rate by 25 basis points, setting the target range at 4.25% to 4.5%. This marks the third rate cut of 2024, designed to bolster economic growth while managing inflation. However, the Fed signaled a cautious approach for 2025, reducing its projected rate cuts from four to two due to persistent inflation, which remains above the 2% target, and a stable unemployment rate.
Meanwhile, the Bank of Japan (BOJ) maintained its interest rate at 0.25% on the same day, focusing on stability amid global economic uncertainties. The decision, supported by an 8-1 vote, faced opposition from Naoki Tamura, who advocated for a hike to 0.5% to address inflation risks. BOJ Governor Kazuo Ueda stressed the need for more data on wage growth and U.S. policy impacts before considering changes. Following the announcement, the yen dropped to a one-month low against the dollar. Markets are now watching for potential policy shifts in January 2025.
In the U.S., the economy grew at an annualized rate of 3.1% in the third quarter of 2024, an upward revision driven by strong consumer spending and export growth. Consumer spending rose 3.7%, its fastest pace since early 2023, while exports surged by 9.6%. Despite high interest rates, GDP has consistently exceeded 2% in eight of the last nine quarters. The unemployment rate remains low at 4.2%, reflecting steady economic performance.
In November 2024, the U.S. Personal Consumption Expenditures (PCE) price index, the Federal Reserve's preferred inflation gauge, rose by 0.1%, down from 0.2% in October, indicating a cooling inflation environment. Annually, the PCE price index increased by 2.4%, slightly up from October’s 2.3%. Excluding food and energy, the core PCE price index also rose by 0.1% following a 0.3% gain in October, maintaining a 2.8% annual rise.
BTC Technical Analysis
Since December 16, the Bitcoin price action has demonstrated a corrective phase following its strong rally earlier in the month. The chart reflects a bearish trend characterized by lower highs and lower lows, indicating a gradual decline in momentum. A key support level can be identified around $93,227.94, where the price recently tested and showed a minor rebound, suggesting some buyer interest. On the other hand, resistance is evident near $99,000, which aligns with a previous consolidation zone.
If the price manages to hold above the $93,227.94 support and breaks above the $99,000 resistance, it could resume its upward trajectory, potentially aiming for the previous peak near $108,000. Conversely, a breakdown below $93,227.94 could trigger further declines, with the next potential support around $86,000.
ETH Technical Analysis
Since December 16, Ethereum's price has been in a correction after a previous rally. The trend shows lower highs and lower lows, signaling bearish momentum. The $3,334 support level has been tested multiple times, highlighting its importance for buyers, but selling pressure remains strong.
Resistance near $3,600 is blocking upward movement and aligns with a previous consolidation phase. If Ethereum breaks above this, it could aim for the next resistance around $4,100. Currently, the price is consolidating around $3,334 with weak recovery attempts. A break below this level could push the price to $3.000 or $3,100. Conversely, a rebound above $3,600 could revive bullish momentum. Traders are closely watching these key levels to gauge the next move.
SOL Technical Analysis
Since December 16, Solana (SOL) has been in a bearish trend after a market correction. The price has dropped from its highs and is now consolidating near the $183 support, a key level with historical buyer interest. However, a lack of strong rebound shows market caution.
The price continues to form lower highs and lows, indicating ongoing selling pressure. Resistance is near $200, where prior rejections occurred. A breakout above $200 could signal a bullish recovery toward $251, while a drop below $183 may push the price down to the next support at $170. Traders should watch for a breakout above $200 to attract buyers or a breakdown below $183 for further declines.
