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Crypto Market Sees Bloodbath Following Fed’s Rate Cut Decision: What’s Happening?
The interest rate cut by the Federal Reserve (Fed) has failed to bring the expected positivity in the crypto market, instead triggering a massive sell-off. As a result, Bitcoin sank below $99,000 and the entire crypto market capitalization took a hit of over $200 million.
According to recent data, Bitcoin plummeted by 5.4% in just one day, following an earlier surge to $108,000 after this week’s inflation news showed cooling inflation rates. This euphoria was short-lived as Bitcoin fell sharply afterwards.
Other prominent altcoins such as Ethereum, XRP, Solana, and Dogecoin did not fare any better, with losses of over 6%, 10%, 7%, and 9% respectively. The rapid decline in cryptocurrency values has resulted in the liquidation of nearly $700 million worth of derivatives contracts within a 24-hour period.
Bitcoin: -5.4%
Ethereum: -6%
XRP: -10%
Solana: -7%
Dogecoin: -9%
This dramatic downturn was not limited to cryptocurrencies alone, as the stock market also experienced a significant decline, with the S&P 500 index falling sharply.
It appears that investors are now worried about the potential for the Fed to slow its rate cuts in 2025 and instead increase inflation, leading to a weakening of investor sentiment. The crypto market has responded accordingly by adopting a “wait-and-see” attitude.
In the short term, this volatility is expected to continue, especially during the Christmas period when liquidity tends to be low.
However, it’s essential to maintain perspective. Despite recent setbacks, the crypto market demonstrated remarkable growth throughout 2024 despite high inflation and interest rates. Long-term drivers of growth for cryptocurrencies include favorable regulatory changes, increased institutional investment, or formal approval of Bitcoin ETFs.
The current bloodbath serves as a valuable reminder that unexpected events and risk are inherent in the cryptocurrency space. It’s crucial to remain calm, analyze information carefully, and avoid emotional decision-making.
Ultimately, this turbulence presents an opportunity for savvy investors to acquire high-quality assets at more attractive prices.
Source: www.cryptoninjas.net
