After the Fed announced a 25 basis point rate cut on Wednesday, Bitcoin's price fell below the $100,000 mark, triggering a major crash in the cryptocurrency market. The selling pressure is a reaction to the Fed's guidance on monetary policy for 2025 and beyond.
Like Bitcoin, altcoins are also facing strong pullbacks of over 10%. Top altcoins such as Ethereum (ETH), Dogecoin (DOGE), XRP, and Solana (SOL) have pulled back by 5-10%, triggering over $860 million in liquidations.
The cryptocurrency market crash led to over $860 million in liquidations
Bitcoin's price fell after the Fed's tough stance for 2025
On Wednesday, the Fed cut rates by 25 basis points for the third time as expected, with Powell laying a hawkish tone for 2025. Powell stated that the Fed will only cut rates twice in 2025, whereas four rate cuts were anticipated.
This is enough to cause Bitcoin's price to fall below the critical support level of $100,000. Thus, after reaching a historical high of over $108,000 earlier this week, this recent adjustment has erased all weekly gains for BTC.
Jerome Powell stated that the Fed remains committed to keeping inflation below the expected target of 2%. The Fed Chair also mentioned that achieving the 2% inflation target may take another 1-2 years, further reinforcing the Fed's hawkish tone.
Despite the cryptocurrency market crash, BTC has outperformed the S&P 500 index
Blockchain analysis platform Santiment reported that BTC has shown stronger relative strength compared to the decline of the S&P 500 index. Santiment stated: "Once the dust settles in the next 24-48 hours, this can actually be interpreted as a strong signal."
Moreover, during today's cryptocurrency market crash, most US Bitcoin ETFs saw net outflows, including Bitwise's BITB, Invesco's BTCO, Ark Invest's ARKB, and Grayscale's GBTC. However, BlackRock's IBIT saw strong inflows, reaching $356 million, offsetting the overall negative impact. Despite the current market turmoil, cryptocurrency market analysts remain optimistic.
Renowned economist Alex Kruger wrote:
"Next week is Christmas, which could change everything. In my opinion, BTC rebounding from 98 and SOL from 195 would be ideal. Then, it will only rise before the inauguration. The excitement and leverage in cryptocurrencies have basically disappeared, which should minimize downside risks. In my view, the overall situation has not changed."
The Bank of Japan kept interest rates unchanged
The Bank of Japan kept its short-term policy interest rate unchanged at -0.1% on Thursday, opting to monitor wage growth and inflation trends before making adjustments. This widely anticipated decision underscores the Bank of Japan's cautious approach to monetary policy.
Due to the Bank of Japan not raising borrowing costs, the yen weakened further, with the exchange rate falling below the critical 155 mark against the dollar.
Consequently, BTC price rebounded from a low below $100,000, trading at $101,020 at the time of publication. According to Coinglass data, BTC liquidations surged to $148 million in 24 hours, with long liquidations amounting to $114 million.
Altcoins have fallen more than Bitcoin
As Bitcoin's price fell today, altcoins also faced greater declines, with ETH, DOGE, XRP, and SOL dropping 5-10%. During today's cryptocurrency market crash, other altcoins experienced even larger pullbacks, reaching 10-20%.
Cryptocurrency market data provider Santiment reported that several major altcoins experienced significant declines over the past 24 hours. Avalanche (AVAX), Chainlink (LINK), and Litecoin (LTC) all dropped 16%, while meme coin Pepe (PEPE) fell 17%, reflecting overall market turmoil.
Santiment noted that despite the significant pullback, this could provide opportunities for dip buyers. "If this is indeed an overreaction, the projects that have dropped the most are likely to offer the most attractive buying opportunities," the report stated.
According to Coinglass data, the overall volatility in the cryptocurrency market has led to a surge in total liquidations to $860 million. The liquidation amount in 24 hours soared to $684.93 million, while short-term liquidations reached $200 million during the cryptocurrency market crash.
According to CoinGape, the altcoin season index has further declined to 55, raising speculation about the end of the altcoin season. According to data from Blockchain Center, the altcoin season index is currently at 55, testing the critical support level of 50. Cryptocurrency market analysts expect a rebound from here.
ETH price rebounds from key support level
ETH price plummeted nearly 6%, but rebounded from a key support level of $3,550. Cryptocurrency analyst IncomeSharks emphasized Ethereum's resilience during recent market volatility, noting that the super trend indicator remains intact and bullish.
"Ethereum ($ETH) has yet to break its super trend, maintaining a bullish outlook," the analyst stated. "Currently, the price is holding at the support level, and shorting is not recommended in this case."
Can XRP's price rise during the cryptocurrency market crash be sustained?
Against the backdrop of a widespread crash in the cryptocurrency market, XRP's price fell 6.2% to $2.25. Cryptocurrency analyst IncomeSharks emphasized that XRP is at a critical moment testing its Supertrend support.
Analysts noted: "If the bulls can hold this super trend level and establish a bullish consolidation pattern, it will provide strong reasons for re-entry." Additionally, another analysis predicts that XRP's price could rebound to $6.
