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“Crypto Crash of December 2024: The Federal Reserve Ripple Effect”

The cryptocurrency market experienced a significant downturn on December 20, 2024, with Bitcoin (BTC) dropping below the psychologically important $100,000 level.

This decline is primarily attributed to the Federal Reserve’s recent monetary policy decisions. On December 18, the Fed announced a 0.25% interest rate cut, bringing the total cuts for the year to 1%.

However, it signaled plans for only two additional cuts in 2025, emphasizing its commitment to controlling inflation. This hawkish stance led to a sell-off in risk assets, including cryptocurrencies.

The market reaction was swift, with Bitcoin falling by 4.9% to $96,631, and briefly touching $95,633. Ethereum (ETH) and other major cryptocurrencies also suffered significant losses.

This downturn resulted in the liquidation of over 361,972 traders, amounting to losses exceeding $1.17 billion across the crypto market.

Additionally, the overall crypto market capitalization saw a substantial reduction, with losses estimated at $3.35 trillion following the Fed’s announcement.

Analysts also point to “over bullish positioning” by investors as a contributing factor to the crash.

In summary, the recent crypto market crash on December 20, 2024, was primarily driven by the Federal Reserve’s monetary policy decisions, leading to a broad sell-off in risk assets and significant liquidations across the market.