Original author: 1912212.eth, Foresight News
The annual Lunar New Year market did not arrive, but instead fell sharply again, further undermining the already fragile market confidence.
Since 3:00 a.m. on January 27, Bitcoin has been falling from $105,000 to $101,168, almost falling below the $100,000 mark. Ethereum has also fallen from $3,300 to $3,188, and has now rebounded to above $3,200. SOL, which hit a record high a few days ago, has also been affected by the market and has now fallen to above $230.
The altcoin market is also in a terrible state. In the 24-hour decline, the celebrity coin TRUMP fell by more than 15% and is now quoted at $26.6; AI concept coin AI16Z fell by more than 17% and is quoted at $0.72, AIXBT fell by more than 15% and is quoted at $0.56; COOKIE fell by more than 14% and is quoted at $0.29; WLD fell by more than 7% and is now quoted at $1.94. Fartcoin fell by 22.4%, GRIFT fell by 33.1%, and BUZZ fell by 33.2% in 24 hours.
The public chain sector SUI fell by more than 8%, quoted at US$3.78, SEI fell by more than US$0.32, quoted at US$0.32; a number of L2s also fell by 7%-10%.
In terms of contract data, the entire network had a liquidation of US$449 million in 24 hours, and long orders had a liquidation of US$404 million. The largest single liquidation occurred in HTX, and the BTC-USDT trading pair was worth US$98.4633 million.
What factors affect this market?
The Federal Reserve will announce its meeting decision this week, and the market will take risks in advance
The Federal Reserve will announce its January interest rate decision at 3 a.m. Beijing time on Thursday. The market generally expects the Fed to maintain the target range of the federal funds rate at 4.25%-4.5% this month, temporarily stopping the pace of easing after three consecutive rate cuts in the second half of last year. According to CMEs Fed Watch tool, traders in the interest rate futures market currently expect the Fed to remain on hold this month with a probability of 99.5%.
It is worth mentioning that although it seems almost certain that the Federal Reserve will skip a rate cut this month, investors will obviously still pay close attention to the views of Federal Reserve Chairman Powell on the future direction of interest rates.
U.S. President Trump emphasized in his speech at the World Economic Forum Annual Meeting in Davos last Thursday that he would ask the Federal Reserve to lower interest rates immediately, saying that he knows more about monetary policy than those responsible for making monetary policy. However, it is clear that the highly independent Federal Reserve may not necessarily do as Trump wishes, especially when Trumps series of policies and trade policies may exacerbate U.S. inflation.
Some market analysts also said that the Federal Reserve may start raising interest rates this year.
We do not believe the Fed will cut rates in 2025 — we do not even think the Fed is done (tightening monetary policy), Thanos Papasavvas, founder and chief investment officer of ABP Invest, wrote in an op-ed. Rather, we expect a resilient U.S. economy and Trumps policies to push up inflation expectations, forcing Fed Chairman Powell to raise rates starting in September.
He also mentioned that the Fed wants to maintain its inflation-fighting credentials after incorrectly judging that previous price increases were temporary. Therefore, Papasavvas predicted that if it had to choose, the Fed would be super orthodox and choose inflation-fighting over job preservation.
The Federal Reserve’s speech this week will be the focus of market attention, and market volatility will increase. Some traders will choose to leave the market early and wait and see, waiting for a signal of certainty.
In addition, after the first week of tariff threats that were loud but little action, Trump took real action. On January 26, local time, US President Trump announced that he would impose a 25% emergency tariff on all Colombian goods entering the United States in response to Colombias refusal to accept flights to deport illegal immigrants. Within a week, the 25% tariff will be increased to 50%. Trumps tariffs and anti-immigration stick also put pressure on US stocks.
U.S. stock futures fell in early Asian trading on Monday, with Nasdaq 100 futures down about 1.2%, SP 500 futures down 0.5%, and Dow futures down 0.2%. The turmoil in traditional financial markets has also cast a shadow on the crypto market.
DeepSeek ignites China and the United States, ushering in a turn in the AI sector
Recently, the R 1 model (DeepSeek R 1) released by the Chinese AI company DeepSeek has become very popular. On January 24, in the professional large model ranking Arena, the DeepSeek-R 1 benchmark test has risen to the third place among all categories of large models, and tied with OpenAI o 1 for first place in the style control model (StyleCtrl) category; and its arena score reached 1357 points, slightly higher than OpenAI o 1s 1352 points.
The creativity of Chinese AI companies is astonishing. Marc Andreessen, founder of A16Z, a top venture capital firm on Wall Street, said on social media that DeepSeek R 1 is one of the most amazing and impressive breakthroughs he has ever seen, and it is open source and a gift to the world. Jim Fan, a senior scientist at Nvidia and head of its AI business, also spoke highly of it.
On January 27, the DeepSeek app topped the free app download rankings in Apples App Store in China and the United States, and the number of downloads in the United States even surpassed ChatGPT. As the DeepSeek concept fermented, artificial intelligence concept stocks in the A-share market rose the most.
The effect of DeepSeeks Silicon Valley shock has also spread to the cryptocurrency circle. AI concept funds have rotated very quickly, and some of the tokens of previously popular projects have even experienced five consecutive daily declines. At the same time, the market value of Solanas new meme token SEEK (DeepSeek) has exceeded 30 million US dollars, and the 24-hour trading volume has reached 56.9 million US dollars.
Future market trends
The market is unstable, and some even believe that the market has turned bearish. What will happen next? Will there be another bull market?
Arthur Hayes, co-founder of BitMEX, has just published a prediction that Bitcoin will experience a sharp correction in the short term, with prices likely to fall from current levels to the $70,000 to $75,000 range, possibly accompanied by a small financial crisis. As global central banks resume quantitative easing policies and liquidity is re-injected into the market, Bitcoin will resume its upward trend and is expected to soar to $250,000 by the end of the year.
However, if we look at the short-term market conditions during the Lunar New Year, statistical charts from 2018 to 2024 show that Bitcoin and altcoins often perform well.
It is worth paying close attention to whether the Spring Festival, which is about to begin on January 29, can replicate the metaphysical market trend.
