Is Bitcoin's Break Above $80,000 Fake?...Virtual Assets, $2.5 Trillion Evaporated Due to Fed's Hawkish Stance

▲ Bitcoin (BTC), Ethereum (ETH), Dogecoin (DOGE), Cryptocurrency Decline/AI Generated Image

The U.S. Federal Reserve's (Fed) hawkish interest rate freeze declaration has sharply dampened investment sentiment for risk assets, pushing the total market capitalization of virtual assets into a phase where key support levels are threatened.

According to crypto media outlet BeInCrypto on April 29 (local time), the total market capitalization of virtual assets recorded $2.51 trillion, a 2.38% decrease from the previous day's high. The Federal Open Market Committee voted 8-4 to keep interest rates frozen at 3.5% to 3.75%. Three out of the four dissenting committee members argued that the accommodative bias should be completely removed, revealing a much stronger hawkish inclination than market expectations. Unlike the S&P 500 index, which closed flat, the virtual asset market aggressively embraced the asset sell-off trend, showing a decline.

The total market capitalization of virtual assets is facing technical issues compounded by macroeconomic pressures. The $2.63 trillion resistance level has thwarted price increases three times in the past two weeks, revealing a lack of conviction among buyers. A 4.6% rebound is needed to recover that level from the current price, but this is a difficult task without clear accommodative catalysts. If the $2.48 trillion support level breaks, the next downside target opens up to $2.38 trillion.

Bitcoin (BTC) is also showing a stagnant trend within an ascending channel, trading around the $75,956 mark. Since the top of the ascending channel, formed in early February, pushed prices down on April 22, Bitcoin has not found new momentum for a breakthrough. Expectations that had supported the rally weakened after Federal Reserve Chairman Jerome Powell signaled there was no urgency for interest rate cuts. For Bitcoin to attempt a significant breakthrough, it must first recover the Fibonacci 23.6% retracement level of $78,341, and a strong upward conviction is expected to form only after it surpasses the $80,474 mark.

World Liberty Financial (WLFI), linked to the family of former U.S. President Donald Trump, plummeted by about 13% to $0.063 with the initiation of its governance vote. This vote addresses the vesting schedule for 62.28 billion locked tokens, applying a 2-year cliff and 3-year linear distribution for 45.24 billion tokens allocated to the founding team and advisors. Early supporters are granted a 2-year cliff and 2-year distribution schedule for 17.04 billion tokens. If insiders agree, up to 4.52 billion tokens could be burned, but tokens held by those who oppose the new schedule will be locked indefinitely.

Macroeconomic pressures are further intensifying the selling pressure caused by the governance catalyst. Ahead of the interest rate meeting, liquidity first flowed out of highly speculative tokens, pushing WLFI down to around $0.061, the bottom of its descending channel. If the $0.061 support level breaks, there is a risk of the price plummeting an additional 26% to $0.044. Conversely, if it successfully finds support in that range, it could reclaim the $0.077 level, setting the stage to weaken downward pressure.

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