Last week, the virtual asset market hit the pause button on its upward trend, entering a period of pullback and consolidation. According to quotes from the crypto exchange OSL, BTC reached a weekly high of US$44,000 and dropped to a low of US$40,511, with a maximum drop of nearly 8%. As of 1:00 PM on December 17th, BTC rebounded to around US$42,160, temporarily stabilizing its downward trend and maintaining at a nearly three-month high. ETH followed a similar trend, reaching a peak of US$2,346 and a low of US$2,140, with a maximum decline of 8.87%. It then rebounded to around US$2,235.

Prior to this round of deline, the cryptocurrency market had seen three consecutive weeks of gains, with BTC rising from a low of $36,600 to a high of US$44,567, and ETH climbing from US$2,017 to a peak of US$2,392. The market’s greed sentiment intensified after these successive gains, and the pullback can help the market return to a healthier trend.

In terms of macroeconomics, the U.S. Federal Reserve, in a widely expected move, kept interest rates unchanged in three consecutive policy meetings. Meanwhile, the Fed adjusted its interest rate projections to soften its stance toward future interest rate hikes, acknowledging a slowdown in inflation over the past year. The dot plot shows that over half of the Fed officials expect at least three rate cuts next year. The financial market's extended period of tight liquidity has somewhat eased, which sets the stage for increased capital flows into risk assets, including virtual assets.

According to on-chain data, the number of non-zero balance BTC addresses continues to grow, reaching 52.38 million. This suggests a rising number of users holding BTC. At the same time, the Bitcoin network processed over 500,000 transactions per day over the past week, reaching an all-time high and marking a significant leap in BTC adoption rate. Additionally, the amount of BTC held by accounts holding BTC for more than a year has reached a new record high, accounting for 70.58% of the total supply. This trend is often seen as an early indicator of a bull market, suggesting that long-term holders are reluctant to sell their coins.

In terms of ETH, its on-chain ecosystem has recently experienced a recovery, leading to a daily increase in the amount of ETH being burned. The circulating supply of ETH has been on a decline over the past week, with an annual inflation rate dropping to -0.89%. This makes ETH a unique asset with both deflationary and interest-bearing properties.

Looking ahead, the upward trend in the cryptocurrency market appears to be  losing strength, which suggests a potential period of volatility until a definitive trend emerges. Given that BTC has already risen by 50% in the last three months, it's important to be cautious. The market may have already 'priced in' multiple positive factors, such as the potential approval of a Bitcoin ETF and Bitcoin halving. Investors should exercise greater caution in portfolio allocation and trading strategies.