Crypto Market Plummets Amidst Fed's Hawkish Stance and Global Economic Jitters

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19.12.2024 34 times read 0 Comments

Why is the Crypto Market Seeing a Major Dump Today?

The cryptocurrency market has recently experienced a significant downturn, with tokens like WRX, BLZ, and AKRO dropping between 40% to 50% within just 24 hours. According to Binance's analysis on their platform (source: binance.com), several factors contribute to this broad sell-off. Global macroeconomic uncertainties such as rising interest rates and inflation concerns have spooked investors into liquidating riskier assets like cryptocurrencies.

Panic selling by retail investors further exacerbates these price drops, triggering cascading stop-loss orders and leveraged position liquidations. Additionally, regulatory uncertainty worldwide adds pressure as governments tighten rules around crypto trading. The decline in trading volume also plays a role; low liquidity means even small sell-offs can cause disproportionate price declines.

Crypto Market Bleeds Following Hawkish Rate Cut Decision by Fed

A recent hawkish decision by the Federal Reserve has led to notable losses across the crypto market, including XRP, Solana, and Dogecoin registering nearly 10% declines each. FXStreet reports that Bitcoin fell sharply following an announcement from the Federal Open Market Committee about slowing down rate cuts planned for 2025 (source: fxstreet.com). This move suggests higher borrowing costs ahead due to increased PCE inflation expectations at year-end.

This development casts doubt over ongoing bullish trends in cryptos as investor sentiment turns cautious regarding future economic conditions under tighter monetary policies set forth during Jerome Powell’s tenure. The impact of such policies could affect asset valuations negatively across various sectors globally, beyond digital currencies, potentially influencing equities markets similarly.

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