Federal Reserve rate cut leads to sudden plunge
According to ChainCatcher news, the Federal Reserve's annual interest rate decision for 2024 has concluded, and the bank has decided to lower the benchmark interest rate by 25 basis points to a range of 4.25%-4.50%, marking the third consecutive rate cut, in line with expectations. In this year's eight decisions, the Federal Reserve has cumulatively cut rates by 100 basis points, consisting of one 50 basis point cut and two 25 basis point cuts, with five instances of maintaining the rate.
Then, on December 18 local time, all three major U.S. stock indexes closed lower, with the Dow Jones down 2.58%, the Nasdaq down 3.56%, and the S&P 500 index down 2.95% at the close.
However, due to the lowered expectations for rate cuts next year, Bitcoin also began to enter a downward trend, with BTC plummeting from a high of $104,800 to a low of $99,214, a short-term drop of as much as 4.6%. As of the time of writing, it reports at $99,470. Meanwhile, the hawkish remarks from Federal Reserve Chairman Powell are undoubtedly the main reason for the drop!
Is Federal Reserve Chairman Powell the instigator of this plunge?
Federal Reserve Chairman Powell stated at a press conference that the Federal Reserve is close to slowing the pace of rate cuts and will make further decisions based on economic data in the future. Powell also mentioned that the Federal Reserve is not allowed to hold Bitcoin and has not sought to amend laws regarding the holding of Bitcoin.
Subsequently, according to Powell's statement, cryptocurrency-related stocks also plummeted significantly, with related stocks experiencing intensified declines. However, some speculate that the new Trump administration may seek to establish government-held Bitcoin stocks. The cryptocurrency market, on the other hand, experienced even greater declines. Bitcoin dropped over 5%, with prices approaching the $100,000 mark; Ethereum fell over 7%, and Dogecoin and others dropped over 11%.
Coinglass data shows that in the past 24 hours, over 300,000 people were liquidated across the cryptocurrency network, with a total liquidation amount of $850 million.
At the same time, 'Federal Reserve mouthpiece' Nick Timiraos believes that the Federal Reserve has hinted at slowing down the pace of rate cuts. 'We are at or near the moment of slowing rate cuts. The slowdown in rate cuts reflects the rising economic data this year. It is believed that the policy still has substantial restrictive limits.' The Federal Reserve's policy statement added the wording 'magnitude and timing,' suggesting a slowdown in the pace of rate cuts to modify potential adjustments.
Three. Summary
In summary, this Federal Reserve rate cut caught people off guard, the sudden drop left many stunned, and this time Powell was just following Trump’s lead!
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