The cryptocurrency market faced a steep decline, shedding nearly 10% of its value and witnessing over $1.25 billion in liquidations within the past 24 hours. Bitcoin plunged below $96,000, while meme coins suffered the heaviest losses. Data from Coinglass revealed that Bitcoin alone experienced $45 million in liquidations, followed by Ethereum at $30 million. This downturn came in the wake of a 25-basis-point interest rate cut by the Federal Reserve on Wednesday, an event typically bullish for crypto due to its signaling of a relaxed monetary policy. However, the market reacted strongly to the Fed's projections for 2025, with Chair Jerome Powell emphasizing higher inflation expectations and a limited scope for rate cuts in the coming year.
While these developments sparked concerns about a bearish cycle, some analysts see this as a temporary correction rather than a long-term trend reversal. Market expert "Titan of Crypto" pointed out that such pullbacks are a natural aspect of bullish cycles, allowing markets to recalibrate. Similarly, analyst Philakone highlighted that these large-scale liquidations often occur towards the end of a bullish year, predicting a resurgence in positive sentiment by mid-December, which could extend into early January. Additionally, an anticipated altcoin season may follow, as increasing Bitcoin liquidations reduce its market dominance, paving the way for growth in altcoins like Ethereum and Solana.
Despite the short-term turbulence, the broader outlook for Bitcoin remains optimistic. With Bitcoin up 130% this year and institutional investors like MicroStrategy and others actively acquiring significant volumes, the long-term fundamentals are strong. Supply-side dynamics further bolster this outlook, as the availability of Bitcoin for sale continues to decline amidst increasing demand. According to CryptoQuant, Bitcoinโs inventory ratio has dropped sharply, signaling a tightening market and potential supply shock. Coupled with growing liquidity in the stablecoin sector and pro-crypto regulatory shifts, these factors suggest the crypto marketโs long-term trajectory remains poised for growth, even as it navigates temporary challenges.
