The world’s largest cryptocurrency Bitcoin, dipped from its glorified $108,000 all-time high to a terrifying low of $100,000 following an announcement by FED Chair Jerome on Thursday.
The Federal Reserve decided to cut interest rates by 25bps for a third consecutive time this year as the US wins battles against inflation and prepares for a more stable economy.
The announcement left almost all crypto assets bleeding red. Bitcoin lost nearly 5% over the past 24 hours, while major altcoins such as XRP, Cardano’s ADA, and Litecoin’s LTC fell as low as 10% before slow recovery.
Even worse, over $1.50 trillion was wiped out from the US stock market. Data collected from Coinglass showed a staggering 278,901 traders faced liquidation, with a total loss of $809 million across various platforms.
This momentum could mean bad news for the crypto market in 2025 even as the incoming administration had said it will open a national inventory of digital assets, similar to the nation’s strategic oil reserve.
However, Powell reminded in a conference that the Fed is “not allowed to own bitcoin” per the Federal Reserve Act.
A sustained circulation of the US dollar is detrimental to Bitcoin because it is linked to a reduction in the world’s money supply.
Prior to the announcement, Andre Dragosch, European Head of Research at Bitwise, had told CoinDesk that “A continued appreciation of the US dollar also poses a macro risk for bitcoin since dollar appreciation is associated with global money supply contraction as well which tends to be bad for bitcoin and other crypto assets,” he added that “In fact, Fed net liquidity continues to decrease. Tightening liquidity and strong dollar is also the biggest risk for BTC in my view … On the other hand, on-chain factors for BTC continue to be very supportive, in particular the ongoing decline in exchange balances which supports the hypothesis that the BTC supply deficit continues to intensify.”
