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Crypto Market Sees Bloodbath Following Fed’s Rate Cut Decision: What’s Happening?
The cryptocurrency market has been thrown into chaos following the Federal Reserve’s unexpected decision to cut interest rates. The move was expected to boost investor sentiment and spark a rally in risky assets, including cryptocurrencies. Instead, the market has reacted with panic selling, driving Bitcoin below $99,000 and wiping out nearly $200 million from the total crypto market capitalization.
The sudden reversal in sentiment is attributed to the Fed’s hawkish tone regarding 2025 interest rate cuts, which may not be as generous as previously anticipated. This change in expectations has led investors to reassess their exposure to cryptocurrencies, resulting in a sharp decline across all major digital assets.
Bitcoin, once surging to $108,000 following this week’s CPI data, lost nearly 5.4% of its value to trade at just under the psychologically significant threshold of $100,000. This drastic sell-off has left many investors reeling and searching for answers as to why the market is not reacting as expected.
Altcoins were not spared from the carnage either, with Ethereum plummeting by over 6%, while XRP, Solana, and Dogecoin fell by 10%, 7%, and 9% respectively. The collective value of these altcoins has been wiped out to the tune of $700 million in just a matter of hours.
The swift collapse in investor sentiment has also had a ripple effect across traditional financial markets, with the S&P 500 index suffering losses. This correlation between crypto and equity markets highlights the significance of Federal Reserve policy decisions on the broader asset landscape.
As the market enters its customary Christmas holiday period of low liquidity, it is likely to experience increased volatility in the short term. However, investors should take solace in the fact that the long-term fundamentals of the industry remain strong. In 2024, despite inflation and high-interest rates, the crypto market demonstrated remarkable resilience.
It’s essential for investors to maintain a level head, be cautious not to make impulsive decisions during periods of heightened volatility, and instead focus on the underlying factors driving growth in the space.
Source: www.cryptoninjas.net
