Federal Reserve rate cut leads to sudden crash
According to ChainCatcher news, the Federal Reserve concluded its 2024 annual interest rate decision, deciding to lower the benchmark interest rate by 25 basis points to a range of 4.25%-4.50%, marking the third consecutive rate cut, in line with expectations. Over eight decisions this year, the Federal Reserve has cumulatively cut rates by 100 basis points, including one 50 basis point cut, two 25 basis point cuts, and five instances of maintaining the rate.
Then, on December 18 local time, all three major U.S. stock indexes closed down, with the Dow Jones falling 2.58%, the Nasdaq dropping 3.56%, and the S&P 500 index declining 2.95% by the end of trading.
However, due to lowered expectations for rate cuts next year, Bitcoin also began to enter a downward trend, plummeting from a high of $104,800 to a low of $99,214, with a short-term drop of up to 4.6%. As of the time of writing, it is reported at $99,470. Meanwhile, the hawkish remarks from Federal Reserve Chairman Powell are undoubtedly the main reason for the sharp decline!
Is Federal Reserve Chairman Powell the instigator of this crash?
Federal Reserve Chairman Powell stated at a press conference that the Federal Reserve is nearing a moment to slow down rate cuts and will make further decisions in the future based on economic data. Powell also mentioned that the Federal Reserve is not allowed to hold Bitcoin and has not sought to amend the laws concerning the holding of Bitcoin.
Subsequently, according to Powell's statements, cryptocurrency-related stocks also fell sharply, with related stocks experiencing intensified declines. However, some speculate that the new Trump administration may seek to establish government-held Bitcoin stocks. The virtual currency market saw even larger declines. Bitcoin fell over 5%, with prices approaching the $100,000 mark; Ethereum plummeted over 7%, and Dogecoin and others dropped over 11%.
Coinglass data shows that in the past 24 hours, more than 300,000 people across the cryptocurrency network were liquidated, with a total liquidation amount of $850 million.
At the same time, 'Federal Reserve mouthpiece' Nick Timiraos believes that the Federal Reserve is signaling a slowdown in the pace of rate cuts. 'We are at or near a moment to slow down rate cuts. The slowdown in rate cuts reflects the higher economic data this year. It is believed that the policy still has substantial restrictive limitations.' The Federal Reserve's policy statement added the wording 'magnitude and timing,' suggesting a slowdown in the pace of rate cuts to modify potential adjustments.
Three. Summary
In summary, this Federal Reserve rate cut took people by surprise, with a sudden crash that left many bewildered; this time Powell was merely acting on Trump's orders!
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