Following a 0.25% interest rate cut by the Federal Reserve, the cryptocurrency market experienced a staggering liquidation of over $239 million within minutes. Bitcoin briefly fell below the $100,000 mark, with other major cryptocurrencies mirroring this decline.
On December 19, the Federal Reserve announced a reduction in its key interest rate by 25 basis points, indicating potential cuts in the forthcoming years. The Fed suggested that while further reductions are likely, there may only be two more in the upcoming year.
Fed Chair Jerome Powell noted a shift in the U.S. government’s stance, allowing the central bank to adopt a more cautious approach in assessing future adjustments to the policy rate. “We think the economy is in a really good place. We think policy is in a really good place,” he stated.
In the immediate aftermath of the Fed’s announcement, the total long liquidations in the crypto market surged by $200 million, skyrocketing from $39.73 million to an astonishing $239.2 million just 30 minutes post-announcement. In the preceding 24 hours, total liquidations reached $853 million, with Ethereum (ETH) leading the way with $134.9 million in liquidations.
Bitcoin (BTC) experienced a dip, falling below the $100,000 threshold with a 5% decrease, but saw a slight recovery thereafter. Currently, Bitcoin is trading at approximately $101,705, marking a 2.35% decline over the past 24 hours.
Other major cryptocurrencies, including Ethereum, Solana (SOL), and XRP, followed Bitcoin’s downward trajectory. Additionally, altcoins like Dogecoin (DOGE) and PEPE also faced challenges after the Fed’s decision.
Ethereum dropped by 0.68% immediately after the announcement, and over the past 24 hours, it has fallen by 4.5%, now trading at $3,674. Meanwhile, XRP faced a nearly 3% decline after the Fed cut, plummeting nearly 7% in the past day, with a current price of $2.36.
Solana was impacted as well, with its price decreasing by 1.15%, leading to a total drop of 3.58% in the last 24 hours as it trades at $208.98.
The altcoin market suffered significantly, with the overall meme coin market cap dropping nearly 8% to $105.2 billion. Dogecoin, the top meme coin by market cap, saw a decline of more than 7% shortly after the Fed’s announcement and has yet to recover, currently trading at $0.36.
PEPE also suffered, experiencing a nearly 4% dip immediately after the announcement and a total decrease of over 11% in the last 24 hours.
The Fed’s measured stance towards future rate cuts indicates a continued effort to manage inflation, which may lead to a stronger dollar and a potential decline in public investment in alternative assets such as cryptocurrencies.
