The cryptocurrency market has experienced a pullback amid diverging Fed policies and liquidity fluctuations. After rebounding to near $90,000 yesterday morning, Bitcoin entered a consolidation phase and began to decline during the US trading session, hitting a low of $85,000 in the early hours. As of this writing, it has recovered to around $86,000, still down 1.9% for the day. Ethereum also came under pressure, failing to sustain momentum after a rebound to $3,170 during the day. It fell to as low as $2,900 in the evening, and is currently hovering near $3,000, with a 24-hour loss of 1.09%. This pullback is directly linked to policy-related anxiety triggered by remarks from Fed officials. Meanwhile, the upcoming nonfarm payroll data release is emerging as a key variable that could determine short-term market direction.

I. Macroeconomic Level: Divergence within the Fed Sparks Market Panic

Uncertainty over the Federal Reserve’s policy trajectory has become the core driver of current market volatility. Following last Friday’s reiteration by two senior officials opposing interest rate cuts, remarks from several core members overnight further highlighted the divisions. Governor Milan expressed dissent for the third consecutive time, not only opposing a conservative 25-basis-point rate cut but explicitly supporting aggressive easing to address economic risks. In contrast, Vice Chair Williams signaled stability, stating that the current monetary policy is “well-positioned” to balance inflation and employment goals. Boston Fed President Collins admitted that the decision to support a rate cut was “extremely difficult.”

This public divergence has been fermenting since December 10, when the Fed announced its third rate cut of the year, with three committee members voting against the decision — the first time since September 2019. The confusion in policy expectations directly triggered a sell-off in risk assets, causing significant declines in U.S. stocks during trading hours, while the cryptocurrency market moved in tandem. Over the past 24 hours, liquidations across the crypto market exceeded $270 million, affecting 110,000 investors.

II. Technical Level: Breakdown Below Key Levels Limits Rebound Potential

BitcoinTechnicallyhas shown clear weakness, breaking below the key $90,000 level. On the daily chart, prices pierced through the lower Bollinger Band, with the band slightly widening.RSIandMACDIndicators continue to signal bearish volume, confirming the dominance of the downward trend. On the four-hour chart, moving averages are arranged in a bearish pattern, exerting downward pressure. However, RSI indicators on the hourly and half-hourly charts have turned upward from oversold levels, indicating a short-term repair need. Current resistance lies in the $88,000–$90,000 range, while support needs to be monitored at $85,500 and $84,000.

Ethereum has shown relatively stronger resilience, with psychological support holding temporarily at $3,000. On the daily chart, prices broke below the middle band and are approaching lower levels. The four-hour Bollinger Bands are opening downward, but the hourly RSI indicator has turned upwards, signaling synchronized short-term recovery signals with Bitcoin. Immediate resistance is at $3,150; reclaiming this level may alleviate downward pressure. Support below is at $2,950, and a breakdown could lead to a test of the $2,800 region.

III. Market Outlook: Nonfarm Payrolls Data to Set Short-Term Direction

The current market is caught in a triple game of ‘policy anxiety – technical repair – data validation.’ During the daytime, cryptocurrencies may continue to experience a narrow rebound and repair. However, before the Federal Reserve’s policy becomes clear, the rebound is likely to remain constrained, and investors should be cautious about a ‘repair followed by another retest’ scenario.

The evening non-farm payroll data will be the key to breaking the deadlock: if the data shows a slowdown in employment growth and a pullback in wage increases, it may strengthen market expectations for a Federal Reserve rate cut next year, providing upward momentum for cryptocurrencies. If the data is unexpectedly strong, it would further support the ‘hawkish pause’ view, intensifying selling pressure in the market. For traders, Bitcoin at $88,000 and Ethereum at $3,000 are short-term pivotal points for bullish and bearish sentiment. Close attention should be paid to trading volumes around these critical levels, avoiding blindly chasing orders before the data release.

Overall, the current correction in the cryptocurrency market reflects a resonance between policy divergence and technical adjustments. Internal divisions within the Federal Reserve have disrupted the market’s established expectations, while technical weaknesses have amplified panic sentiment. Although the release of non-farm payroll data may temporarily clarify short-term policy clues, in the long run, the alignment between inflation trends, labor market resilience, and the Federal Reserve’s policy path will remain the core logic determining the trend of the cryptocurrency market. Investors need to remain rational amid short-term volatility, being cautious about liquidity shocks both before and after the data release, while also focusing on long-term fundamentals to seize strategic opportunities.

Investing is not a 100-meter sprint but a marathon. Market ups and downs are like wind, rain, and thorns; some chase gains and cut losses in disarray, while others patiently select targets and wait for time to reward them. There’s no need to envy short-term windfalls; money earned by luck will eventually be lost through lack of skill. Stay true to your principles—remain calm when others are greedy and resolute when they are fearful. Time is always a friend to value investors.

(Friendly Reminder: The above analysis or recommendations represent only personal views and do not constitute any investment advice. Investment involves risks, and caution is advised. Please make rational decisions based on your actual circumstances.)