Cryptocurrency prices, including Bitcoin, experienced a significant downturn following Federal Reserve Chair Jerome Powell's comments on future interest rate cuts.1 Bitcoin dipped below $96,000, and the CoinDesk 20 Index plummeted 10%. This drop coincided with a broader market sell-off triggered by the Fed's projection of fewer rate cuts than anticipated for 2025.
Altcoins suffered even steeper losses, with Ethereum, Cardano, and others seeing declines between 10% and 20%. Notably, Solana erased its post-election gains with a substantial drop. This volatility resulted in nearly $1.2 billion in liquidated leveraged trading positions, primarily long positions betting on price increases.
Traditional markets also reacted to the Fed's announcement, although with less severity. The U.S. dollar strengthened, and Treasury yields rose. Analysts suggest the crypto market, which had seen substantial gains since the U.S. election, was due for a correction. The Fed's announcement provided the catalyst. Some also suggest year-end tax loss selling may be contributing to the decline.
Cryptocurrency prices, including Bitcoin, experienced a significant downturn following Federal Reserve Chair Jerome Powell's comments on future interest rate cuts. Bitcoin dipped below $96,000, and the CoinDesk 20 Index plummeted 10%. This drop coincided with a broader market sell-off triggered by the Fed's projection of fewer rate cuts than anticipated for 2025.
Altcoins suffered even steeper losses, with Ethereum, Cardano, and others seeing declines between 10% and 20%. Notably, Solana erased its post-election gains with a substantial drop. This volatility resulted in nearly $1.2 billion in liquidated leveraged trading positions, primarily long positions betting on price increases.
Traditional markets also reacted to the Fed's announcement, although with less severity. The U.S. dollar strengthened, and Treasury yields rose. Analysts suggest the crypto market, which had seen substantial gains since the U.S. election, was due for a correction. The Fed's announcement provided the catalyst. Some also suggest year-end tax loss selling may be contributing to the decline.