Crypto Market Faces Sharp Drop Amid $1 Billion Liquidations Following Fed's Rate Cuts
The cryptocurrency market has experienced a significant downturn, with nearly $1.25 billion in liquidations over the past 24 hours, a nearly 10% drop in total market value. Bitcoin fell below $96,000, while meme coins faced the brunt of the losses. The correction follows the Federal Reserve's decision to cut interest rates by 25 basis points on Wednesday, which traditionally could signal a bullish market for crypto. However, concerns arose from the Fed's projections for higher inflation and only two rate cuts in 2025, causing a market sell-off.
Bitcoin, which saw over $45 million in liquidations, and Ethereum, with nearly $30 million, were the primary assets affected. Despite the severity of the losses, the stock market saw even worse impact, with nearly $1.5 trillion wiped out. Analysts, however, consider this a short-term market correction rather than the start of a prolonged bearish cycle.
Some experts predict an altcoin season could be on the horizon as Bitcoin's dominance wanes. The altcoin market cap, excluding Bitcoin and Ethereum, is nearing its previous highs, suggesting potential for further growth in the sector.
On a more positive note, Bitcoin's long-term outlook remains strong. MicroStrategy, led by Michael Saylor, has been actively acquiring Bitcoin, purchasing $3 billion worth in December. Additionally, the shrinking supply of Bitcoin, with increased demand meeting fewer available coins, could signal a potential supply shock. While the short-term market faces pressure, long-term bullish sentiment persists, fueled by ongoing Bitcoin accumulation and favorable regulatory shifts.
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