Original author: 1912212.eth, Foresight News

The annual Lunar New Year market trend has not arrived, but instead, there has been another significant drop, further undermining the already fragile market confidence.

Bitcoin fell from around $105,000 at about 3 AM on January 27, dropping to a low of around $101,168, nearly breaching the $100,000 mark. Ethereum also dropped from around $3,300 to $3,188, currently recovering to above $3,200. SOL, which had recently set a historical high, has also been affected by the market, now falling to above $230.

The altcoin market is also in dire straits, with the celebrity coin TRUMP dropping over 15%, currently priced at $26.6; the AI concept coin AI16Z down over 17%, priced at $0.72; AIXBT down over 15%, priced at $0.56; COOKIE down over 14%, priced at $0.29; WLD down over 7%, currently priced at $1.94. Fartcoin has dropped 22.4%, GRIFT down 33.1%, and BUZZ down 33.2% in 24 hours.

In the public chain sector, SUI is down over 8%, priced at $3.78, SEI down over 0.32%, priced at $0.32; various L2s are also down between 7%-10%.

In terms of contract data, $449 million in liquidations occurred across the network in 24 hours, with $404 million in long liquidations, the largest single liquidation occurring on HTX, with the BTC-USDT trading pair valued at $98.4633 million.

What factors are influencing this market trend?

The Federal Reserve's meeting decision this week, with the market taking precautions in advance

The Federal Reserve will announce its January interest rate decision at 3 AM Beijing time on Thursday. The market generally expects the Fed to maintain the federal funds rate target range at 4.25%-4.5% this month, temporarily halting the easing after three consecutive rate cuts in the second half of last year. According to the CME FedWatch Tool, traders in the interest rate futures market currently have a 99.5% probability expectation that the Fed will remain unchanged this month.

It is worth mentioning that although it seems almost certain that the Fed will skip a rate cut this month, investors are clearly still closely focused on Fed Chairman Powell's views on the future direction of interest rates.

Last Thursday, U.S. President Trump emphasized during a speech at the World Economic Forum in Davos that he would ask the Fed to immediately lower interest rates, claiming he understands monetary policy better than those responsible for it. However, it is evident that the highly independent Fed may not follow Trump's wishes, especially given that Trump's series of policies and trade policies could exacerbate inflation in the U.S.

Some market analysts also suggest that the Fed may start raising rates this year.

Thanos Papasavvas, founder and chief investment officer of ABP Invest, wrote in a column, "We do not believe the Fed will cut rates in 2025 — we do not even think the Fed has finished tightening (monetary policy); on the contrary, we expect the resilient U.S. economy and Trump's policies to push up inflation expectations, forcing Fed Chairman Powell to start raising rates in September."

He also mentioned that after the Fed misjudged previous price increases as temporary, it hopes to maintain its anti-inflation credibility. Therefore, Papasavvas predicts that if a choice must be made, the Fed will be "super orthodox, choosing anti-inflation over job preservation."

The Fed's speech this week will be the focus of market attention, and market volatility is expected to increase, with some traders choosing to exit early and wait for definitive signals.

In addition, after a week of loud threats regarding tariffs with little action, Trump has taken concrete steps. On January 26, local time, President Trump stated that he would impose a 25% emergency tariff on all goods entering the U.S. from Colombia in response to Colombia's refusal to accept flights for the repatriation of illegal immigrants, with the tariff increasing to 50% within a week. Trump's tariffs and anti-immigration stance have also put pressure on U.S. stocks.

U.S. stock futures fell early Monday in Asia, with Nasdaq 100 futures down about 1.2%, S&P 500 futures down 0.5%, and Dow futures down 0.2%. The turmoil in traditional financial markets has also cast a shadow over the crypto market.

DeepSeek ignites U.S.-China tensions, AI sector experiences rotation

Recently, the R1 model (DeepSeek R1) released by the Chinese AI company DeepSeek has gained significant attention. On January 24, in the professional large model ranking Arena, DeepSeek-R1's benchmark test rose to third place among all large models, ranking first in the style control model (StyleCtrl) category alongside OpenAI's o1; its Arena score reached 1357, slightly surpassing OpenAI's o1 score of 1352.

The creativity of Chinese AI companies is astonishing. Marc Andreessen, founder of top Wall Street venture capital firm A16Z, stated on social media that DeepSeek R1 is one of the most amazing and impressive breakthroughs he has ever seen, and it is open-source, a gift to the world. Jim Fan, a senior scientist at Nvidia and head of AI agent business, also gave it high praise.

On January 27, the DeepSeek app topped the free app download charts in the Apple App Store in both China and the U.S., with downloads in the U.S. even surpassing ChatGPT. The DeepSeek concept is fermenting, and AI concept stocks in the A-share market are seeing significant gains.

The effects of DeepSeek's impact after the tremors in Silicon Valley have also reached the crypto space, with AI concept funds rotating rapidly, and some previously hot project tokens experiencing five consecutive daily declines. Meanwhile, the new meme token SEEK (DeepSeek) on the Solana chain has surpassed a market cap of $30 million, with a 24-hour trading volume reaching $56.9 million.

Future market trends

Market sentiment is unstable, with some voices even suggesting that it has turned bearish. What will happen next? Will there be a bull market?

Arthur Hayes, co-founder of BitMEX, recently predicted, "Bitcoin will experience a significant correction in the short term, with prices potentially falling to the $70,000 to $75,000 range, possibly accompanied by a small financial crisis. As global central banks resume quantitative easing, liquidity will be re-injected into the market, and Bitcoin will restart its upward trend, potentially soaring to $250,000 by the end of the year."

However, looking at the short-term market trend around the Lunar New Year, statistics from 2018-2024 show that Bitcoin and altcoins often perform well.

With the Lunar New Year starting on January 29, whether it can replicate the mystical market trend is worth close attention.

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