The value of Bitcoin has dropped 6% within 24 hours and fell below $100,000 to trade at $99,047 in Wednesday's trading session after U.S. Federal Reserve Chairman Jerome Powell rejected the U.S. BTC reserve plan.

The impact of the statement attributed to Jerome Powell has been felt across the market, with major altcoins also recording significant losses. According to data from Coinglass Data, the leading cryptocurrency fell to a low of $96,000 at the time of writing. Cryptocurrency derivatives recorded over $1.2 billion in liquidations in the past 24 hours.

The Decline of Bitcoin Has Affected the Altcoin Market

The price correction following Jerome's rejection of the U.S. BTC reserve plan has spilled over into the altcoin market, with the entire cryptocurrency market capitalization dropping 9% to at least $3.63 trillion. The king of Altcoins, Ethereum, lost 10% of its value to trade at $3,372, while Solana recorded a similar drop to a low of $187. Chainlink and Dogecoin were the biggest losers among the top 20 cryptocurrencies by market capitalization, losing 17.3% and 18% respectively.

Jerome Powell disagreed with the idea of proposing a U.S. BTC reserve plan. He believes that the U.S. central bank "is not seeking low-hanging fruit," adding that currently, there is no law allowing the bank to hold Bitcoin. Most experts believe that these sentiments are the reason behind the strong correction that caused Bitcoin to drop from its latest all-time high of $108,000 reached earlier this week.

Jerome Powell's Statement on the Federal Reserve is Also an Issue

The latest price surge of Bitcoin, reaching six figures, was driven by U.S. President-elect Donald Trump's proposal for a U.S. BTC reserve plan. Several states, including Florida and Texas, have supported the plan to create state-backed Bitcoin reserves, further fueling optimism in the digital market. Despite the setback, other experts believe that Jerome Powell's statement is just a piece of the puzzle.

Experts say another piece of the puzzle revolves around the U.S. Federal Reserve's announcement of a third consecutive interest rate cut of 25 basis points. However, unlike previous months, the cryptocurrency market reacted negatively and declined this time. Analysts suggest that the reason may be due to Jerome Powell's wording, who hinted that the central bank might halt the current policy of lowering interest rates due to disappointing CPI data from October and November. Jerome stated, "Today's call was a closer call but we decided it was the right call."

Is There Any Glimmer of Hope?

Despite the dark cloud looming after the reactions attributed to the statement by FED Chairman Jerome Powell, some players in the cryptocurrency space believe there is still a glimmer of hope. Former BitMEX CEO Arthur Hayes, now CIO at Maelstrom, recently stated that he predicts a significant downturn in the cryptocurrency market as we approach Trump's inauguration in January. According to Hayes, investors will have to face the reality that Trump will need to enact policy changes on or around January 20 to activate their expectations.

Conclusion

After breaking the $108,000 mark on Wednesday, Bitcoin once again fell below the $100,000 mark, dragging the entire cryptocurrency market down due to pressure from the stock market. Jerome Powell's statement regarding the U.S. BTC reserve plan may bear some responsibility for the strong reaction, not to mention his sentiment about the future of the FED's reserve cuts. Cryptocurrency enthusiasts still believe that the inauguration of cryptocurrency President Donald Trump on January 20, 2025, will guide the issuance of a clean regulatory environment that encourages growth in the digital asset space.

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