The cryptocurrency market has seen a significant decline, with losses exceeding $850 million due to liquidations. This followed the Federal Reserve's announcement of a 25 basis point reduction in the benchmark policy rate.

Despite market expectations for a modest interest rate cut by the Federal Reserve, Chairman Powell indicated a conservative approach to future rate adjustments in 2025, leading to market uncertainty and large-scale sell-offs.

The crash of Bitcoin has led to nearly 300,000 cryptocurrency traders going bankrupt.

Powell pointed out in a press conference that although the inflation rate has been "steadily" declining, the pace of decline has been "slower than expected." Therefore, the Federal Reserve has raised its inflation forecast for 2025 to 2.5%, implying that economic conditions may tighten, thereby limiting liquidity in financial markets, including cryptocurrencies.

The Federal Reserve stated in a press release: "The inflation rate has moved towards the Committee's 2% target but remains slightly high. The economic outlook is uncertain, and the Committee is monitoring the risks to its dual mandate."

The shift in monetary policy has caused Bitcoin to plummet significantly, falling below $99,000, a drop of over 8% from its historical peak of $108,000. Similarly, the broader cryptocurrency market, including major coins like Ethereum (ETH), has also suffered significant losses.

According to Coinglass, in the past 24 hours, liquidation asset losses have reached up to $869.39 million, with long positions losing $749.59 million and short positions losing $119.8 million. Notably, altcoins were hit hardest, accounting for over $222 million of the liquidated assets.

Amid these market fluctuations, a total of 299,335 traders were caught off guard. The largest single liquidation order occurred on Binance, involving a $7 million Ethereum trade.

Despite facing these setbacks, the sentiment among cryptocurrency traders remains surprisingly robust. The cryptocurrency Fear and Greed Index currently stands at 75, reflecting a strong bullish outlook amid market volatility. This sentiment highlights the ongoing appeal of cryptocurrency as an investment, even in turbulent times.

The influx of funds into Bitcoin-related investment tools has significantly bolstered this optimistic sentiment. For example, BlackRock's iShares Bitcoin Trust recorded $359.6 million in new investments just on Wednesday. Meanwhile, the total inflow for all spot Bitcoin ETFs reached $275.3 million.

These developments reflect the cautious stance of the Federal Reserve and the optimistic outlook of the cryptocurrency market, indicating a complex interplay between macroeconomic policy and the cryptocurrency market. Investors seem to hedge against economic uncertainty by increasing their holdings in digital assets, which, despite their volatility, are viewed as a viable strategy for portfolio diversification.

Recent market activity highlights the impact of U.S. monetary policy on the cryptocurrency industry. As the Federal Reserve continues to tackle inflation-related challenges, the cryptocurrency market's reactions remain swift and pronounced.