Is the cryptocurrency bull market over? Executives discuss market collapse

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After the Federal Open Market Committee (FOMC) meeting on December 18, the crypto market experienced significant volatility. Although the Federal Reserve lowered interest rates by 25 basis points as expected, the conservative forecast for rate cuts in 2025 triggered a chain reaction in the market.

Reduction in rate cuts:

The Federal Reserve lowered its forecast for rate cuts in 2025 from four times to two, indicating a more cautious monetary policy stance. This news led to a decline in traditional risk asset markets, with the S&P 500 index dropping by 3% and the Russell 2000 small-cap index falling by 4.4%.

Impact on the crypto market:

Bitcoin fell more than 5% after the meeting, briefly dipping below the $100,000 mark, before recovering slightly. As of the time of writing, Bitcoin is trading at $101,766.

Altcoins saw even more significant declines, with most dropping by double digits.

Market dynamics: Leverage liquidation and technical indicators

Leverage liquidation:

According to Hougan's analysis, the market liquidated $600 million in leveraged long positions that day, further exacerbating the price pullback. This phenomenon is not uncommon in the crypto market but highlights the market's high volatility.

Technical indicators:

The 10-day and 20-day exponential moving averages mentioned by Hougan (at $102,000 and $99,000, respectively) still show positive momentum signals, indicating that the long-term trend may still be bullish.

Long-term bull market trend: Fundamentals remain solid

Despite the significant short-term pullback, industry insiders generally believe that the long-term outlook for the crypto market remains optimistic. Several key trends support this view:

Technological innovation and adoption:

Bitcoin's status as a store of value has strengthened, and breakthroughs in programmable blockchain technology continue to drive industry growth.

Macroeconomic dynamics:

Analysts believe that the Federal Reserve, by adjusting inflation and unemployment rate expectations, has actually opened the door for larger rate cuts in the future. The appeal of cryptocurrencies as a hedge against traditional market volatility may further increase.

After the FOMC meeting, the crypto market experienced short-term volatility due to uncertainty in interest rate policies. However, driven by policy trends, institutional adoption, and technological innovation, the long-term outlook for cryptocurrencies remains optimistic.

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