Federal Reserve interest rate cut expectations heat up, Bitcoin surges then pulls back, hinting at a bigger trend?

After a strong rally at the beginning of January, Bitcoin and Ethereum experienced a phased correction, but the market did not turn pessimistic. Instead, attention shifted to the Federal Reserve’s rate cut expectations within the year. On Thursday, Bitcoin hovered around $91,000, with the initial rebound momentum cooling down, but the overall risk environment still favored supporting crypto assets.

According to market data, Bitcoin fell about 2% in the past 24 hours but still gained over 3% in the past 7 days; Ethereum retreated approximately 3% on the day, with a weekly increase close to 6%. Among mainstream altcoins, XRP experienced a larger short-term decline, down about 4.5% in 24 hours, but still accumulated a 17% increase over the week; Dogecoin continued to lead, with a weekly gain of over 22%, indicating that the market’s preference for high-elasticity assets has not yet faded.

The market correction in cryptocurrencies is closely related to macroeconomic changes in traditional financial markets. Bloomberg pointed out that recent weak economic data has strengthened market bets on the Fed cutting rates later this year. As a result, U.S. Treasury prices generally rose, with the 10-year Treasury yield falling to around 4.14%. Data from ADP Research showed that in December, private sector employment increased by 41,000 jobs, below the market expectation of 50,000, further fueling expectations of easing policies.

Interest rate futures markets once again priced in the possibility of at least two rate cuts of 25 basis points each within the year. Asian bond markets also strengthened, with Australian and New Zealand government bond prices rising, and Japanese 30-year government bond futures maintaining gains after auctions.

This environment is significant for cryptocurrencies. B2BINPAY analysts noted that crypto assets are still fundamentally viewed as risk assets, with their performance highly dependent on macro liquidity and market sentiment dominated by Bitcoin. Under easing expectations, funds are more likely to flow from cash and low-yield assets into high-risk, high-volatility assets like Bitcoin and Ethereum.

However, the current correction also reminds the market that the early January rally was not a one-way straight line. Post-holiday trading resumption, reallocation of funds, and a phased rebound in demand for traditional assets could still pose challenges to Bitcoin’s price. Short-term volatility does not mean the end of the trend; rather, it may be a necessary digestion period before the next market rally.