Fed's Hawkish Stance Pulls Bitcoin Below $100K, Altcoins Plummet
Bitcoin lost approximately 7% of its value following the FOMC meeting as the Fed adopted an unexpectedly hawkish stance, testing levels below $100,000. The Fed reduced interest rates by 25 basis points as expected; however, it halved the number of interest rate cuts anticipated for 2025. Fed Chairman Jerome Powell indicated that the central bank would take a more cautious approach regarding changes to the policy interest rate.
Morgan Stanley (MS) analysts revised their expectations for interest rate cuts in January 2025, showing only an 8.6% probability of a rate cut during the Fed's January meeting. This was a surprising development for other market participants expecting growth during the same period. Following the Fed's announcement, sharp fluctuations were observed in the markets; after Powell's comments, the Nasdaq experienced a decline of over 3%, while the Dow Jones index recorded its longest losing streak in the last 50 years. Treasury yields rose, and the dollar reached its highest level in two years.
During Powell's speech, Bitcoin lost $5,000, dropping to $98,900. Ethereum tested around the $3,500 level with a decline of over 5%, while Ripple fell by approximately 9% and Dogecoin decreased by 8%. A broad sell-off occurred in cryptocurrency exchanges, contrary to the anticipated positive reaction in the market following the news of expected interest rate cuts. The drop in Bitcoin's value once again triggered faster selling in the altcoin market.
The Fed's hawkish tone and the potential for limited cuts in the policy rate led to liquidations exceeding $850 million in the Bitcoin market. While Bitcoin maintained a dominance rate of 57.01% with a market capitalization of $2 trillion, trading volume surged by 34.8%, reaching $98.56 billion.
Meme coins also suffered due to the overall negativity in the market. Dogecoin fell by 7% to $0.36, while Shiba Inu dropped 6% to $0.00002425. Other meme coins like PEPE, BONK, and WIF experienced declines between 12% and 15%.
As volatility continued in the market, Bitcoin slightly recovered towards $101,500 in the morning hours. Ethereum began to shift its direction towards $3,700 in the last hours. In the altcoin market, BGB, PENGU, and ENA remained strong among the top 100 cryptocurrencies in the past 24 hours, while FLOKI, WIF, and DYDX continued to be the largest losers.