The US Federal Reserve (Fed) lowered interest rates by 0.25% yesterday, as expected. Fed Chairman Jerome Powell stated in the press conference where he announced the interest rate cut decision that this step was aimed at bringing the economy to a more balanced position. However, Powell also emphasized that they would adopt a cautious approach to further interest rate cuts. Following this statement, both the US stock market and the cryptocurrency market experienced serious declines. The FOMC's interest rate cut caused anxiety among investors and caused fluctuations in both the cryptocurrency and stock markets. With this development, a tweet shared by Santiment stated that AVAX and three other cryptocurrencies offered buying opportunities. Here are the details…
The Fed cut interest rates by 25 basis points as expected by the markets. However, Jerome Powell stated in his statements following this decision that the rate cut was only taken as an effort to improve the current economic situation and that further rate cuts would be approached cautiously. Powell also warned that after three consecutive rate cuts at the end of 2024, rate cuts in 2025 could be more limited. Interestingly, during Powell’s statements, he gave the message that the US “is not allowed to own Bitcoin” despite Donald Trump’s promise to investigate US plans to add Bitcoin to its balance sheet. These statements caused sudden and sharp price drops in risky assets such as cryptocurrencies.
Bitcoin fell below $105,000 for the first time since Dec. 11, falling to around $99,000. These losses represent a drop of about $10,000 from Tuesday’s peak of $108,000. Altcoins suffered even bigger losses. Many altcoins, including XRP, DOGE, AVAX, PEPE, LTC, and LINK, lost double-digit amounts from their peaks to their lows.
Santiment noted that the Fed-induced market crash could be an overreaction, and in this case, the last four altcoins (AVAX, Chainlink, Litecoin, and Pepe) offer a buying opportunity. Santiment stated the following:
“After the FOMC rate cut, both crypto and stock investors felt some anxiety. However, this anxiety increased with Jerome Powell’s statements that the rate cuts he predicted for 2025 will be more limited than in previous years. Altcoins in particular have lost significant value in the last 24 hours. Assets such as Avalanche (-16%), Chainlink (-16%), Litecoin (-16%) and Pepe (-17%) have experienced significant declines. If these declines are an overreaction, the projects that have experienced the biggest losses may be offering a buying opportunity.”
While this statement points to potential buying opportunities for market players, it remains a matter of curiosity how investors will react to the current market conditions.
