Causes of the market drop:
Federal Reserve (Fed) Statements:
Jerome Powell, chairman of the Fed, stated that the institution cannot hold Bitcoin according to current laws. This statement cooled expectations that the Fed could incorporate Bitcoin into its reserves, an idea that had gained traction after Donald Trump's electoral victory.
Interest Rate Cut with Restrictive Focus:
The Fed announced an interest rate cut but with a restrictive tone, which generated uncertainty in the financial markets. This approach can negatively affect risk assets, including cryptocurrencies.
Natural Market Correction:
Bitcoin reached an all-time high of around $108,000 on December 17, followed by a correction that took it to lows of approximately $100,000 on December 18. Such corrections are common after reaching all-time highs.
Personal Evaluation:
It is essential to analyze your risk tolerance, investment horizon, and financial goals before making decisions.
If your focus is long-term, you might consider holding your current positions, as cryptocurrencies tend to experience short-term volatility.
If you prefer a more active strategy, you could take advantage of corrections to acquire more assets at reduced prices, as long as you are willing to assume the associated risks.
Diversification and Risk Management:
Diversifying your portfolio and setting clear limits for potential losses can help mitigate risks in volatile markets.
You can also use safer investment methods like Binance Earn or discover launches and lock tokens in Launchpool.