Crypto market falls as Fed hawkishly cuts rates

To lower rates twice in 2025, the Fed was hawkish.

Solana, Dogecoin, and XRP lost almost 10%.

The previous 24 hours saw approximately $700 million in crypto liquidations.

Bitcoin and the crypto market fell on Wednesday as the Federal Open Market Committee (FOMC) slowed rate reduction in 2025, lowering the benchmark federal funds rate to 4.25% to 4.50%.

Fed's rate decision clouds crypto surge
The Fed decreased the federal funds rate by 25bps on Wednesday, dropping it to 4.25% to 4.50% after the December meeting.

Market expectations were met by the 25-basis-point rate decrease. Crypto prices fell after the Fed's announcement.

This is because the market response may be related to 2025 rather than the December rate drop.

Fed Chair Jerome Powell said the apex bank reduced anticipated cuts from 4 to 2 in 2025. The crypto market sold down since this signals a more hawkish view for the coming year.

Additionally, the Fed boosted its 2025 PCE inflation forecast from 2.1% to 2.5%, suggesting inflation may rise in the next year.

As investors expect adverse market activity next year, it may potentially hurt the crypto market's bull rise.

Bitcoin fell 5.4% to $100,314 after the statement, reducing the crypto industry's market value by $200 million.

Most major cryptocurrencies fell with Bitcoin, including Ethereum, which fell over 6% in 24 hours.

Other tokens including XRP, Solana, and Dogecoin fell 10%, 7%, and 9%.

The latest downturn prompted $675 million in liquidations in 24 hours, with Bitcoin and Ethereum seeing extended liquidations of over $100 million apiece.

After the Fed announcement, the S&P 500 dropped dramatically, demonstrating a strong link between crypto and equities.

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