Reuters reported on December 18, 2024, that the US stock market experienced its largest drop in months after the Federal Reserve decided to cut interest rates by another 25 basis points, while simultaneously expressing caution about slowing the pace of rate cuts in 2025. The Fed has lowered the interest rate to a range of 4.25%-4.50%, and is expected to cut another half percentage point by the end of 2025 as the labor market remains strong and inflation shows signs of stabilizing.
This decline has heavily impacted crypto-related stocks, with the Dow Jones falling 2.58%, the S&P 500 dropping 2.95%, and Nasdaq decreasing by as much as 3.56%. Notably, shares of Microstrategy (MSTR.O) fell by 9.5%, MARA Holdings (MARA.O) dropped by 12.2%, and Riot Platforms (RIOT.O) declined by 14.5%, after Fed Chairman Jerome Powell stated that the central bank is not allowed to hold Bitcoin and is not seeking to change the laws to do so. This has raised concerns that US policy under newly elected President Donald Trump may not support the aggressive development of the government's coin investment fund.
Major sectors within the S&P 500 all declined, with real estate and consumer discretionary being the hardest hit. The CBOE Volatility Index - a measure predicting the volatility of the US stock market - surged to its highest level in four months at 27.62.
Currently, investors are also concerned that Trump’s policies, such as tariffs, could reignite higher inflation. This could put significant pressure on markets in the first quarter of next year, especially as the 10-year bond yield has reached its highest level since May 31.
Given the current situation, investors in the crypto community need to pay special attention to market developments to make appropriate investment decisions, especially in the context of altcoins also facing expectations of significant volatility.
Source: Reuters
