Fed’s Rate Cut Triggers Bitcoin Market Turbulence

The Federal Reserve’s recent 25 basis point rate reduction has led to notable instability in the Bitcoin and cryptocurrency sectors. Following the announcement, Bitcoin’s value dipped below the crucial $100,000 threshold, resulting in heightened selling pressure due to market trepidations surrounding the Fed’s projected modest rate cuts for 2025 and beyond.

What Caused the $860 Million Liquidation?

This decline in Bitcoin triggered up to a 10% loss in various altcoins, including Ethereum, Dogecoin, XRP, and Solana, culminating in a staggering total liquidation of $860 million. According to blockchain analysis firm Santiment, Bitcoin’s performance remained comparatively stable against the S&P 500 index, indicating a complex reaction to the Fed’s policy shift.

How Are Altcoins Performing Post-Announcement?

Altcoins experienced sharper declines than Bitcoin, with Ethereum just managing to hold the $3,550 mark. In contrast, XRP fell to $2.25, risking a breach of its critical support. Analyst IncomeSharks pointed out that Ethereum’s indicators still suggest potential growth, yet XRP’s future looks bleak if it cannot maintain its current level.

The decision by the Bank of Japan to maintain its interest rates led to a depreciation of the yen against the dollar. Despite an inflow of $356 million into BlackRock’s IBIT Bitcoin ETF, other ETFs faced net outflows, highlighting the mixed sentiment within the market.

• Bitcoin’s value dropped below $100,000 following Fed’s rate cut.
• Total market liquidation reached $860 million.
• Ethereum remained above $3,550, while XRP struggles at $2.25.
• BlackRock’s ETF saw inflows while other ETFs faced outflows.

Current conditions suggest that the Altcoin Season Index’s decline to 55 may signal the waning of the altcoin season. The volatility in the crypto market is urging traders to adopt a more cautious approach as they navigate through this turbulent phase.