Bitcoin and Major Cryptocurrencies Decline After Fed Rate Cut and Powell’s Commentary
Following Federal Reserve Chair Jerome Powell’s announcement, Bitcoin and other major cryptocurrencies experienced sharp declines. Despite a rate cut, Powell’s hawkish comments concerning future policy adjustments led to investor concerns, resulting in significant market liquidations. Bitcoin dropped from a recent high of $108,000 to $100,430, while XRP and Dogecoin also saw substantial losses. The market remains on edge as it reacts to ongoing monetary policy changes.
Bitcoin and other major cryptocurrencies, including Ethereum, XRP, and Dogecoin, experienced significant declines following Federal Reserve Chair Jerome Powell’s recent announcement regarding interest rates. Although the Fed cut interest rates, Powell’s hawkish remarks concerning the potential for future rate adjustments in 2025 sparked concerns among investors, prompting a retreat from riskier assets such as cryptocurrencies and U.S. equities.
Bitcoin, the foremost cryptocurrency by market capitalization, recorded a sharp decline of 5% over the past 24 hours, dropping to $100,430 after reaching an all-time high of $108,000 earlier this week. This downturn erased three consecutive days of record highs, demonstrating the market’s sensitivity to Powell’s commentary and the prevailing market unease.
In a similar vein, XRP witnessed an even steeper drop, declining by 10% in one day after a brief spike the previous Tuesday. Dogecoin also suffered a notable decrease of 9%, falling to $0.363, marking a monthly low for the popular meme coin.
The Fed’s rate decision has led to a surge in market liquidations, with traders holding bullish positions being caught off guard. Over the past 24 hours, more than $690 million in futures positions were liquidated, primarily impacting long bets. Notably, a staggering $300 million was liquidated within just one hour, per data from CoinGlass.
Historically, cryptocurrencies like Bitcoin have performed well in low-interest-rate environments due to increased risk appetite and liquidity. However, the Federal Reserve’s aggressive rate hikes in 2022, implemented to combat post-pandemic inflation, have diminished the appeal of Bitcoin and similar assets. The recent 25-basis-point rate cut indicates a shift in monetary policy, although Powell’s statement regarding caution towards future rate adjustments has left the market in a state of uncertainty.
Despite the recent slump, Bitcoin’s unprecedented rally to $108,000 illustrates its expanding significance in financial markets. Noteworthy discussions among prominent figures, including former President Donald Trump and other Republicans, have suggested the idea of the U.S. holding Bitcoin in its strategic reserves, hinting at its growing legitimacy in financial discussions.
In a notable statement earlier this year, Powell characterized Bitcoin as more comparable to gold rather than the U.S. dollar, emphasizing its nature as a speculative asset instead of a dependable store of value: “Bitcoin is not a competitor for the dollar; it’s really a competitor for gold.” Nevertheless, he clarified that the Federal Reserve does not have the authorization to hold Bitcoin, nor is it pursuing any legislative changes to that effect.
The fluctuations in the market following Powell’s remarks indicate the challenges faced by central banks in managing monetary policy without causing market disruptions. Although Bitcoin continues to establish its position, its speculative aspects keep it closely tied to market sentiment and macroeconomic fluctuations. As such, the cryptocurrency market’s next moves will likely be influenced by the Federal Reserve’s broader strategies leading into 2025.
In summary, the recent Fed interest rate cut and Jerome Powell’s hawkish outlook regarding future rate adjustments have caused significant turmoil in the cryptocurrency market. Major cryptocurrencies like Bitcoin and XRP faced steep declines, which reflects the asset class’s sensitivity to Federal Reserve policies. As Bitcoin seeks to solidify its place in financial markets, its performance remains influenced by broader economic conditions and policy shifts.
Original Source: bravenewcoin.com
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