Key Points
The crypto market experienced a significant liquidation of over $239 million within minutes following the Federal Reserve’s decision to cut the interest rate by 0.25%. Major cryptocurrencies, including Bitcoin (BTC), experienced a dip.
Impact of the Fed’s Rate Cut
The Federal Reserve reduced its key interest rate by 25 basis points on Dec. 19. It also hinted at potential cuts in the coming years. Jerome Powell, the Fed Chair, noted that the agency could afford to be more cautious about further adjustments to their policy rate due to the U.S. government’s less restrictive stance.
The crypto market reacted to the Fed rate cut with a surge in total long liquidation. According to Coinglass data, it rose from a mere $39.73 million to a staggering $239.2 million within 30 minutes of the announcement. The past 24 hours saw a total of $853 million crypto asset liquidations, with Ethereum (ETH) leading at $134.9 million.
Bitcoin (BTC) temporarily fell below the $100,000 mark, dropping by 5%. It slightly recovered afterwards and is currently trading at $101,705, marking a 2.35% decrease in the past 24 hours.
Other major cryptocurrencies, including Ethereum, Solana (SOL), and XRP (XRP), followed Bitcoin’s downward trend. Altcoins like DOGE (DOGE) and PEPE (PEPE) also struggled post the Fed’s rate cut.
Ethereum’s price dipped by 0.68% following the Fed rate cut. It has decreased by 4.5% in the past 24 hours, with its current price at $3,674. XRP’s price also dipped by nearly 3%, with a nearly 7% plummet in the past 24 hours, currently sitting at $2.36.
Solana was also affected by the Fed cut, with a price decrease of 1.15%. It continued its downward trend to 3.58% in the past 24 hours, currently trading at $208.98.
The altcoin market also suffered, with the total market cap of meme coins falling by nearly 8% to $105.2 billion, according to CoinMarketCap. Dogecoin, the top meme coin by market cap, fell by more than 7% post the Fed cut and is currently trading at $0.36.
PEPE also dipped by nearly 4% after the Fed cut and has decreased by more than 11% in the past 24 hours.
The Fed’s cautious stance towards future rate cuts indicates a continued focus on controlling inflation. This could potentially strengthen the dollar and decrease public investment in alternative assets like cryptocurrencies.
This article is for educational purposes only and does not serve as investment advice.
