Cryptocurrencies are down significantly following the Federal Reserve’s hawkish announcement about interest rates for 2025. The Fed’s decision to cut rates by 25 basis points triggered a sell-off across the crypto market, resulting in $700 million in liquidations and a notable decrease in major cryptocurrencies, including Bitcoin and Ethereum.

The cryptocurrency market has experienced significant declines following the announcement of the Federal Reserve’s hawkish stance regarding interest rate cuts for 2025. Specifically, the Fed’s decision to lower rates by 25 basis points has not only correlated with a recent downturn in the market prices of major cryptocurrencies like Bitcoin, Ethereum, XRP, Solana, and Dogecoin, but has also led to $700 million in liquidations within a mere 24-hour span. The adjustments in rate outlook, coupled with increased inflation expectations, have prompted investors to sell off their positions, casting uncertainty over the previously bullish sentiment in the crypto space.

The Federal Reserve’s recent policy announcement introduced a hawkish outlook for the U.S. economy, particularly affecting the cryptocurrency market that has flourished amidst lower interest rates. With the benchmark federal funds rate now ranging from 4.25% to 4.50%, expectations have shifted dramatically, causing market participants to reevaluate their strategies. The Fed’s reduction of potential interest rate cuts from four to two in 2025 was particularly alarming, fostering additional pessimism as investors weighed the implications of rising inflation on their assets.

In summary, the cryptocurrency market’s downturn is predominantly attributed to the Federal Reserve’s revised interest rate policy and inflation outlook. As significant sell-offs occurred, a $700 million liquidation within just one day highlighted the sensitive nature of the crypto market to macroeconomic shifts. With increased caution among investors regarding potential future economic conditions, the path ahead for cryptocurrencies remains uncertain.

Original Source: www.fxstreet.com

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