US Federal Reserve Chairman Jerome Powell has sparked a sell-off in the stock market with an overly cautious forecast for interest rate cuts in 2025. Because of this, prices for cryptocurrencies collapsed the day before.
Image source: coindesk.com
Bitcoin, which previously managed to overcome the $100 thousand level, against the backdrop of pessimism from the head of the Federal Reserve, lost 7.6% of its price in a day and fell below $95 thousand. With other cryptocurrencies, everything is even worse: Ethereum lost 12% and ended up below the mark $3500; Cardano, Chainlink, Aptos, Avalanche and Dogecoin dropped by 15–20%; Solana fell to its lowest level since November 7, virtually erasing its gains – after an all-time high less than a month ago, the cryptocurrency lost 26%.
Over the past 24 hours, approximately $1.2 billion worth of leveraged crypto derivatives positions were liquidated. More than $1 billion of this was in long positions—bet on price increases. The traditional S&P 500 and tech-heavy Nasdaq were up 0.5% from Wednesday’s close.
After Donald Trump won the presidential election, cryptocurrencies rose in price sharply because he promised support for the industry. The statement by the head of the Federal Reserve provoked their sharp fall, but some experts suggest not to dramatize: at the end of the year, securities sales often occur – investors seek to compensate for losses at the expense of profits in order to reduce their tax liabilities. It is difficult to say how strong the influence of this trend was in this case, but it may well have been a contributing factor.