Although the US Federal Reserve reduced key interest rates by 25 basis points as expected, Jerome Powell made a couple of comments that impacted the entire crypto market in a very negative way.
The president of the central bank warned that the rate cuts for 2025 could be smaller after the three in a row at the end of 2024 and warned that the United States “is not allowed to own bitcoins,” despite Donald Trump’s promise to explore how the country could include BTC on its balance sheet.
Riskier assets, such as cryptocurrencies, reacted with immediate and violent price drops. Bitcoin, for example, fell from above $105,000 to below $99,000 for the first time since December 11. Losses extend to nearly ten thousand dollars compared to Tuesday afternoon’s peak of more than $108,000.
However, altcoins were hit even more severely. Many plunged by double digits from their respective highs to lows, including XRP, DOGE, AVAX, PEPE, LTC, and LINK.
Interestingly, Santiment weighed in on the correction and described the latter four as the likely beneficiaries if the Fed-induced crisis was a market overreaction.
“If this was truly an overreaction, there is a reasonable chance that the projects with the biggest dips are those worth taking advantage of the biggest dip buying opportunities,” the tweet reads.
After the FOMC interest rate cuts, both cryptocurrency and stock traders felt a little worried. Not because of the current cuts, but because of Jerome Powell’s 2025 projection of having half as many rate cuts as expected.
Altcoins, in particular, have managed… pic.twitter.com/LVR2oIvCRu
– Sentiment (@santimentfeed) December 19, 2024
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