With Trump continually appointing heads of institutions friendly to cryptos, and the resignation of SEC Chairman Gary Gensler, who has faced widespread criticism, it is expected that the new SEC appointed by the Trump administration will fully relax restrictions on the crypto industry, creating a significant positive policy environment for bitcoin.

The price increases of other small and medium-sized altcoins are not as substantial as that of bitcoin, as institutions are buying bitcoin spot etf, causing Wall Street to frantically chase bitcoin prices. Last week, there were net inflows of funds for all five trading days, with Thursday reaching as high as 0.1 billion USD. The growth is quite remarkable, and it is undeniable that the impressive surge last week was driven by the price increase of bitcoin spot etf. This means that the market gains are mostly due to the frenzied investments from institutions, while retail investors are comparatively more calm.

Research reports also indicate that bitcoin will continue to rise. Researchers are quite optimistic about the outlook for the crypto market, generally predicting that bitcoin will stabilize at around 0.1 million USD and may even advance towards 0.12 million USD this year. However, bitcoin has notably retreated just 200 USD away from 0.1 million USD, and further dropped below 96,000 USD early this morning.

Where are the risks in the crypto market now? Is there a possibility of a crash?

The biggest potential risk in the market is the 'usa economy falling into recession.'

To analyze the risks in the crypto market, one must first look at the possibility of a pause in interest rate cuts or a reversal of easing policies. Currently, there is no visible signaling of a shift. First, the price index is no longer the focus. The decline in inflation is already a determined and ongoing trend. The health of the job market is what the Fed is currently focused on because the usa tourism industry has entered the winter season, which is traditionally a slow period. There isn't strong momentum in job creation, and maintaining stable employment is the primary task.

At this time, the 'speed of rate cuts' becomes critical, considering that the Fed will soon enter a cycle of interest rate cuts, and the new quarterly earnings reports from the us stocks have not performed as well as expected. The actual consumer strength in the usa is not as robust as imagined; the current price increase is merely a result of capital returning to the usa after Trump's election, redirecting towards stocks, creating an inflated stock price.

In fact, the usa economy is not as resilient as in previous quarters, which can be seen from the Fed's recent interest rate cut policy. During the last FOMC meeting, all members voted in favor of lowering rates by one basis point, indicating that it is almost a foregone conclusion that the Fed will cut rates by one basis point each quarter. This means that there is currently no risk in interest rate policy and the authorities will only gradually lower rates.

When the market no longer anticipates the Fed will reverse its interest rate policy, the crypto market also surged in line with this expectation. However, the zero-risk interest rates are insufficient to drive such a high increase in bitcoin; the real driving force behind it is the forthcoming relaxation of cryptocurrency industry policies under Trump. Gold was also a hot investment commodity not long ago, but its gains are now far behind those of bitcoin. Investors are overly optimistic about the Trump administration opening up the crypto choice market or high-leverage tools.

In this context, it is believed that more attention should be paid to risks and a more conservative strategy adopted to respond to the overheated market. Currently, the greatest risk in the investment market is solely 'a recession in the usa.' With the usa elections already concluded, the government no longer needs to beautify employment data through major expenditures.

If the usa really falls into recession (which is not very likely), even consecutive rate cuts cannot save the market. One can refer to the rapid rate cuts in 2020 that led to a significant crash in the crypto market. At this time, it is very likely to be a turning point for bitcoin's price, and the timing of this occurrence is hard to predict. It is advisable to moderately adjust investment positions to diversify risk, as it is currently not suitable to bet too heavily on the market.