K33 Research: Global markets digest the Fed's 2025 rate cut expectations, and Bitcoin is closely related to stock market performance

K33 Research analysts said in a report that Bitcoin has remained above $95,000 despite the decline in global stock indices. However, on a weekly basis, Bitcoin fell in tandem with major stock indices. Vetle Lunde, head of research at K33, said: "In the past two weeks after the FOMC meeting, global risks have decreased, and Bitcoin has a two-week return of negative 11%, while Ethereum has fallen 15%, pushing the ETH/BTC exchange rate down to 0.036." Vetle said that the current decline in Bitcoin is closely related to global stock markets. The digital asset's 30-day correlation with the Nasdaq has exceeded 0.50 for the first time since the end of September. He believes that the FOMC meeting on December 18 was a key factor in the market's decline. At this meeting, the Fed's dot plot was revised to predict two rate cuts in 2025, down from the four predicted in September. Rate cuts tend to boost markets, so the expected reduction in the number of rate cuts is not good for risk assets such as Bitcoin. "Even though the Fed has cut rates by 100 basis points since September, the 10-year Treasury yield has risen by 100 basis points, suggesting that the market is expecting inflationary impulses in the future," Vetle said, noting that Bitcoin experienced large ETF outflows after the FOMC meeting, while MicroStrategy's purchases were also more restrained. (The Block)