On December 19, the news reported that the Federal Reserve lowered the benchmark interest rate by 25 basis points as scheduled on Wednesday, while significantly raising future policy interest rate and inflation expectations. It is expected that only two rate cuts will occur next year, totaling 50 basis points, which is half of the previous expectations.
According to monitoring data from BiyaPay, after the Federal Reserve released the dot plot and economic projections, market risk aversion surged sharply, and all three major U.S. stock indices fell. The S&P 500 index closed down 2.95%, the Dow Jones Industrial Average fell 2.58%, marking ten consecutive trading days of decline, setting the longest losing streak since 1974, and the Nasdaq index dropped 3.56%. Tesla's stock price fell over 8%, becoming the biggest loser among technology giants. Cryptocurrency-related stocks generally declined, with MSTR down 9.52% and Coinbase down 10.2%.
The Federal Reserve's actions led to a collapse in the U.S. stock market, and the cryptocurrency market also experienced a significant pullback. Bitcoin's price fell below $100,000, and a statement from Fed Chair Powell that 'the Federal Reserve neither allows nor intends to hold Bitcoin' further intensified the market's selling pressure, with Bitcoin down 6.2%, priced at $99,235 at the time of writing. Ethereum briefly hit $3,542, with a decline of 7.27%, and other altcoins generally saw double-digit declines. In the past 24 hours, the total liquidation amount in the cryptocurrency market reached $842 million, exacerbating market panic.
In the foreign exchange and commodities markets, the Federal Reserve significantly lowered interest rate cut expectations, causing the U.S. dollar index to rise by over 1%, reaching a two-year high; gold prices fell by more than 1%, hitting a one-month low; a decrease in U.S. crude oil inventories pushed oil prices higher, but the slowing rate cut pace suppressed expectations for oil demand, causing oil prices to retreat after a surge, with gains gradually being digested.
The interest rate dot plot released by the Federal Reserve indicates that only two rate cuts are expected by 2025, a hawkish stance that exceeds the forecasts from the September dot plot, leading to extreme market panic. Federal Reserve officials also anticipate two more rate cuts in 2026 and one more in 2027.
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