Today, the cryptocurrency market is experiencing a serious downturn, with Bitcoin dropping to $108,000 and Ethereum slipping below $4,000.
Summary
- The crypto market is facing a significant crash, wiping out billions in value.
- This downturn occurred just hours after the Federal Reserve reduced rates.
- Liquidations surged by 130%, exceeding $1.3 billion.
The total market capitalization for all cryptocurrencies declined by 4% over the past 24 hours, sitting at $3.64 trillion, with the Fear and Greed Index dropping to a fear level of 34.
Crypto market declines following the Fed’s decision
The cryptocurrency market is in decline after the Federal Reserve announced a hawkish interest rate reduction on Wednesday. Jerome Powell and other officials decreased rates by 0.25%, which brings the benchmark rate to a range between 3.75% and 4.0%.
Moreover, they revealed plans to conclude the quantitative tightening that has persisted over the last two years, which is usually perceived as a method to boost the economy.
The primary cause of the stock and crypto markets’ crash post-Fed announcement is that officials did not indicate a rate cut for December, which analysts had anticipated.
On a brighter note, there is speculation that additional cuts could occur next year after Jerome Powell’s tenure concludes.
The ongoing crash in the crypto sphere also accounts for the spike in liquidations over the past 24 hours, which rose over 120% to $1.1 billion.
In the last day, more than 213k traders faced liquidations, with Bitcoin (BTC) positions amounting to nearly $500 million being erased. Ethereum (ETH) positions exceeding $255 million were also closed following margin calls.
Declining Fear and Greed Index and open interest
As the crypto market crashes, a wave of fear has gripped investors. Reports indicate that the Fear and Greed Index has dropped to a fear level of 34. Likewise, the CNN Money Fear and Greed Index stands at a fear level of 42.
It is typical for both crypto and stock markets to decline when investor sentiment shifts towards fear, evident as futures open interest in the derivatives market fell by more than 1% to $161 billion.
Fear in the crypto space heightened earlier this month following Donald Trump’s announcement of potential extensive tariffs on goods imported from China. This led to a significant crash and liquidations surpassing $20 billion.
