Although the US Fed reduced the key interest rates by 25 basis points as expected, Jerome Powell made a couple of remarks that impacted the entire crypto market in a highly negative manner.
The central bank’s Chair warned that the rate cuts for 2025 could be fewer after the three consecutive ones at the end of 2024 and warned that the US is “not allowed to own bitcoin,” despite Donald Trump’s promise to explore how the country could put BTC on its balance sheet.
Riskier assets like cryptocurrencies reacted with immediate and violent price declines. Bitcoin, for one, dumped from over $105,000 to under $99,000 for the first time since December 11. The losses extend to nearly ten grand when compared to the Tuesday afternoon peak of over $108,000.
The altcoins, though, were impacted even more severely. Many plummeted by double digits from their respective tops to bottoms, including XRP, DOGE, AVAX, PEPE, LTC, and LINK.
Interestingly, Santiment weighed in on the correction and outlined the last four as the potential beneficiaries if the Fed-induced crash was a market overreaction.
“If this was indeed an overreaction, there is a reasonable chance that the projects with the biggest drops will be the ones worth taking the biggest dip buy chances on,” – reads the tweet.
After the FOMC interest rate cuts, both crypto and equities traders were left feeling a bit concerned. Not because of the current cuts, but due to Jerome Powell’s projection for 2025 to have half the amount of rate cuts as expected.
Altcoins, in particular, have gotten pic.twitter.com/LVR2oIvCRu
Santiment (@santimentfeed) December 19, 2024