Market Dynamics and Hotspot Analysis

Macroeconomic Environment

The Federal Reserve's meeting minutes reveal rising inflation risks, and the pace of interest rate cuts may slow down.

The minutes from the Federal Reserve's December meeting recently released show that participants are generally concerned about the increasing risks of rising inflation, particularly considering the tariffs and immigration policies that the new government may implement. Almost all participants believe that the Federal Reserve is approaching the point of slowing down its monetary easing efforts, reflecting confidence in the economy's vitality.

Although this meeting lowered the federal funds rate target range by 25 basis points to 4.25%-4.5%, officials remain cautious about future rate cuts. It is expected that there will only be a 75 basis point cut throughout 2025, and the market generally anticipates that the Federal Reserve will maintain interest rates at the end of this month's meeting, with the first rate cut likely not occurring until June.

The meeting minutes indicate that although inflation has eased over the past year, recent higher-than-expected inflation data and policy uncertainty have left participants uneasy about the inflation outlook. The Federal Reserve Chairman stated that the current economic situation calls for more cautious monetary policy decisions, which means the Fed may slow the pace of interest rate cuts in the coming months to respond to the changing economic environment.

The rise in global bond yields poses a challenge to the cryptocurrency bull market.

Since the end of 2024, the cryptocurrency market has been in a bull market; however, the rising trend of global government bond yields has begun to attract widespread attention in the market. Analysis shows that the yield on the U.S. 10-year Treasury bond has risen to 4.70%, close to a multi-year high, and has increased by more than 100 basis points since the Federal Reserve first lowered the federal funds rate in September.

At the same time, the yield on 30-year UK government bonds reached 5.35% this Wednesday, the highest level since 1998, having also risen by 105 basis points since the Federal Reserve's interest rate cut in September. The rise in these rates reflects changes in the global economic environment and may also influence investors' choices between cryptocurrencies and other high-risk assets, thereby posing a challenge to the ongoing bull market in crypto.

As bond yields rise, investors may reassess their risk appetite, potentially impacting the demand for cryptocurrencies. This trend is worth noting for participants in the crypto market.

Web3 Field Dynamics

US regulators call for expedited cryptocurrency legislation process

The outgoing chairman of the U.S. Commodity Futures Trading Commission has once again emphasized the urgency of Congress in regulating cryptocurrencies. He stated that despite no longer serving as chairman, he will continue to actively promote progress in the field.

During a media interview, he pointed out that the legislation of cryptocurrencies takes time and mentioned the impact of the new president and members of Congress on the legislative process. He expects the legislative process to take six to ten months, while the subsequent rule-making may last for a year.

He believes that the acting chairman will play a key role in the new regulatory environment, and pointed out that current committee members have been exploring the establishment of a "sandbox" environment to allow cryptocurrency participants to conduct business within a controlled framework without worrying about enforcement or regulatory pressure.

He also mentioned that the legislative efforts promoted by some lawmakers, while not perfect, are still positive attempts. He believes that the existing regulations cannot effectively address the challenges faced by the cryptocurrency market, and there is an urgent need to update and improve the regulatory framework.

The U.S. Department of Justice has been authorized to sell a large amount of Bitcoin, and the market response has been mixed.

The U.S. Department of Justice has been authorized to sell 69,370 Bitcoins seized in a case, worth approximately $6.5 billion. The U.S. government currently holds a total of 198,109 Bitcoins, valued at around $18.6 billion, and 54,753 Ethereums, worth about $18 million.

The Ministry of Justice applied to sell these assets citing the volatility of Bitcoin prices. Although they have been authorized for sale, the specific timing of the sale has yet to be determined. There are only 11 days left until the new president officially takes office, and the new president has stated that he will not sell any Bitcoin after taking office, which adds uncertainty to future sale plans; relevant forecasts show a 22% probability of sale.

Affected by this news, the price of Bitcoin has fallen by nearly 2%, now quoted at $93,365.2. This event has raised concerns in the market about a potential influx of a large amount of Bitcoin, while also reflecting a change in the government's attitude towards the disposal of crypto assets.

Hot Projects and Industry Development

G.A.M.E. Fund 1 promotes the development of Web3 games and AI agents.

Two institutions have jointly launched the G.A.M.E. Fund 1, aimed at promoting the development of Web3 games, AI agents, and social application layers. The first round of investment has been confirmed for a mobile casual gaming giant, which has over 110 million global users.

G.A.M.E. Fund 1 focuses on three key areas: Web3 game innovation, providing infrastructure and tools for game developers; AI agent development, dedicated to creating autonomous virtual characters and enhancing collective intelligence; and social content creation, offering users specialized monetization tools and gaming experiences.

An executive of the fund emphasized that this fund will promote the intersection between gaming, artificial intelligence, and social platforms. He stated: "The future of gaming lies in the combination of high-performance infrastructure, artificial intelligence, and social connectivity." This initiative reflects the strategic layout in the Web3 field for the integration of gaming, AI, and social media.

$Smelt: A meme coin project stemming from political controversy

$Smelt is a meme coin project inspired by political controversies in California, USA. During the devastating wildfires in California, critics accused the governor of being "indifferent" to the impact of the fires in order to protect an endangered fish species called smelt.

Previously, the Governor of California refused to sign the water resource recovery declaration. If signed, this declaration would allow excessive rainwater and snowmelt from the north to deliver large amounts of water resources to California regions daily, which could greatly alleviate wildfire disasters.

The incident has become the focus of political debate, and as the wildfires continue, there is still room for discussion on related topics. $Smelt quickly sparked heated discussions in the community after its launch, with a market cap reaching 6 million dollars. It is worth noting that this meme coin was automatically launched by AI, reflecting the trend of integration between AI technology and the cryptocurrency market.