The recent decline in the cryptocurrency market reflects the uncertainty generated by the Federal Reserve’s decisions and economic projections, although some investors continue to see long-term opportunities in assets such as Bitcoin.
The cryptocurrency market is going through one of its worst falls so far this year. Bitcoin (BTC) suffers a 6% crash, falling to $92,000, while Ethereum (ETH) experiences an even steeper 10% drop, putting $3,000 at risk.
Since its historical peak of $108,000 reached on December 17, BTC loses $16,000, and cryptocurrency exchange-traded funds (ETFs) suffer net outflows of more than $600 million in just 24 hours.
The outlook is equally gloomy for altcoins, which are also registering significant falls. Tokens like XRP, Binance Coin (BNB) and Tron (TRX) have lost around 10%, while Solana (SOL), Cardano (ADA), Avalanche (AVAX) and Chainlink (LINK), among others, suffer drops double digit. One of the most notable movements is that of Dogecoin (DOGE), which plummets by nearly 20% in the last 24 hours.
This collapse has caused the total capitalization of the crypto market to lose 7.5% in just 24 hours, eliminating $500 billion from its value. Despite these drops, the Crypto Fear and Greed Index continues to reflect a feeling of greed, although with a slight moderation after the recent declines. The warnings about an extreme correction in the market, which had been announced, seem to have materialized.
Crypto marketcap drop
According to data from CoinGlass, liquidations of positions in Bitcoin have been massive: more than $268 million have been liquidated in the last 24 hours, with 210 million in long positions, indicating expectations of higher prices. In total, more than 331,000 investors have seen their positions closed, bringing the total liquidations in the market to over US$1 billion.
Analysts agree that the recent drop in cryptocurrency prices is related to the latest decision by the United States Federal Reserve (Fed). The US central bank cut interest rates by 25 basis points, marking the third consecutive decrease. However, what has really altered the market are the Fed’s forecasts for the future, which have been less aggressive than expected. Although the Fed expects additional cuts in 2025, their magnitude is less than what the market consensus anticipated, which has generated uncertainty.
In addition, the Fed’s new economic projections reflect an expectation of higher inflation, higher economic growth and lower unemployment, which has led to a more hawkish stance from the central bank. This position seems to anticipate the effects of the policies of President-elect Donald Trump, whose rise to power raises doubts about the economic prospects of the United States.
Despite the temporary correction, some investors remain optimistic about the future of Bitcoin, as the asset has demonstrated sustained growth in previous weeks. However, analysts such as those at 10x Research are more cautious, warning that weak demand in key economies such as Europe and China could limit global growth and inflation, which could influence crypto markets and crypto assets. risk in general. Furthermore, a stronger US dollar could impact corporate profits in the US and further affect the cryptocurrency market.
Source: Ambito
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