Bitcoin experienced a brief drop to $108,000, but has bounced back to $110,022, with fairly large amounts that it is likely to maintain for the time being.
Some hawkish whispers from the Federal Reserve created panic among investors, resulting in more than $1.3 billion of crypto liquidated from the market.
The Crypto Fear and Greed Index has dropped to 34, meaning panic is rising, and investors are behaving more cautiously.
Crypto prices today showed mixed sentiments as the major coins traded downward. Bitcoin price has briefly dropped to $108,000 before resurging to $110,000 level. Ethereum and other leading altcoins are also going down, as investors react to recent Federal Reserve policy decisions and broader market uncertainty. Let’s explore why the crypto market is down today based on CoinMarketCap data.
Bitcoin price was trading at $110,022, up by 0.92% in the last 24 hours, although it briefly dropped to $108,000 earlier in the session. The leading cryptocurrency maintained a market capitalization of $2.19 trillion, with approximately $69 billion in trading volume over the past day. Despite recent volatility, Bitcoin was the dominant force in the crypto market, with 19.94 million BTC in circulation.
Ethereum price was down 0.74% at $3,861, having slipped briefly below the psychologically important $4,000 level that was within many traders' sights. The market capitalization of this second-largest cryptocurrency currently stands at $466 billion, while its daily trading volume was $39.2 billion. The circulating supply of the Ethereum network is 120.69 million ETH tokens.
Among the major digital assets, the Solana price has taken the biggest hit of late, down 3.38% to $186.43. The blockchain ecosystem now has a market capitalization of $102.5 billion with $8.26 billion in 24-hour trading volume. The fact that Solana has fallen more than the more popular cryptocurrencies indicates how smaller-cap digital assets are likely to post more exaggerated swings when the market is highly volatile.
The price of the XRP has fallen 1.28% to $2.48, while its market cap stands at $149.3 billion with strong trading volume of $5.63 billion. The native token of the Binance ecosystem, BNB, dipped 0.66% at $1,098.28 while maintaining a market cap of $151.2 billion. In contrast, the Cardano price was down 2.80% at $0.6148, while its market cap stands at $22 billion.
Dogecoin decreased 1.47% to $0.1857, indicating the generally market-sensitive nature of the meme coin. TRON was an outlier, up 0.19% to $0.2948, one of the few gainers at the top end of the cryptocurrency market.
As expected, other stablecoins, such as Tether (USDT) and USD Coin (USDC), were steady near their $1 peg. Thus, these coins stood out as a safe haven for traders during the downturn.
Also Read: Crypto Prices Today: Bitcoin Price Falls 3.8% to $108,000; Ethereum Down 3.6% Amid Fed Caution
The main factor contributing to today's decline in crypto prices is the recent policy announcement by the Federal Reserve. Although the Fed cut the interest rate by 0.25% to a range between 3.75% and 4.0%, it failed to indicate another rate cut in December hope shared by many in the market. This disappointed investors who had expectations of a more dovish approach to monetary policy.
The Fed also announced that it would end quantitative tightening, normally used to spur economic growth. This was a positive sign, but not enough to balance out the prospect of less rate cuts in the future.
Massive Liquidations Hit Crypto Market
These sudden price swings have led to the liquidation of more than $1.3 billion of cryptocurrency positions over the past 24 hours, up by 130% compared to the day before. The number of traders who saw their positions liquidated also reached 213,000, with prices moving to levels that triggered margin calls.
Bitcoin positions worth almost $500 million were liquidated, while Ethereum positions exceeding $255 million were wiped out. These forced sales often put further downward pressure on crypto prices today, with liquidated positions being sold automatically into the market.
Market sentiment has indeed turned decidedly negative, with the Crypto Fear and Greed Index plunging to 34, firmly in the fear zone. A shift in investor psychology often leads to further selling as traders become more risk-averse.
The derivatives market also shows signs of stress, as futures open interest has declined by more than 1% to $161 billion. The reduction indicates that traders have closed their leveraged positions and are stepping back from the market.
To make matters worse, several digital asset treasury companies or DATCOs have started to sell their cryptocurrency holdings. ETHZilla, formerly a biotech company before pivoting to hoard Ethereum in August, just sold roughly $40 million worth of tokens from its treasury. It intends to use the proceeds to buy back shares as it attempts to bridge the gap between its stock price and the value of its crypto.
Other high-profile DATCOs, including BitMine Immersion Technologies, Eightco Holdings, and SharpLink Gaming, have seen their shares crash at least 70% from peak levels. As their stocks began trading below the value of their crypto holdings, concerns emerged that these companies might trigger a broader wave of selling.
While there is no real evidence that selling by DATCO was the cause of the overall decline in the market, it has contributed to increased volatility in certain segments of the market.
Thursday's coordinated drop in both crypto prices and stock markets raised fresh questions about Bitcoin's potential role as a "safe haven" asset. Many Bitcoin supporters have long argued that the cryptocurrency could be a hedge against stock market volatility, in much the same way as gold. The problem is that, when stocks fall and Bitcoin does too, that narrative takes a serious hit.
The crypto market had already suffered a big shock on October 10, when more than $19 billion of positions were liquidated in what some referred to as a "Black Friday-like event." It has yet to recover from that episode, leaving it susceptible to additional shocks.
Added to that has been the residual of earlier warnings by President Donald Trump of possible tariffs on Chinese goods.
Also Read: Crypto News Today: Bangkok Ponzi Arrest, Mastercard’s $2B Stablecoin Push, Brazil Eyes Bitcoin Mining, Solana ETF Debuts
Investors are now keenly watching the next Fed meeting and any indication of future rate cuts in 2025. As Jerome Powell's era in the Fed comes to an end, it is believed that his successor may take another stance in monetary policy. Until some clarity emerges on the outlook and the direction of Fed policy, crypto prices today may face further headwinds as traders remain cautious.
1. Why did Bitcoin price drop today?
Finally, investors reacted to the latest policy update from the Federal Reserve, and Bitcoin's price began falling. Although a small rate cut is present, the Fed hinted that no further cuts would be likely for the time being. This has dampened market confidence. The result, of course, has been mass liquidations and short-term selling pressure across the crypto market.
2. How about Ethereum and other cryptocurrencies?
Ethereum slid below the $4,000 level once more, while Solana, XRP, and Cardano were down by between 1% and 3%. Only a few assets, such as TRON and some stablecoins, have resisted the general fall of the market.
3. What triggered massive liquidations in the crypto market?
Over $1.3 billion in positions were liquidated in less than 24 hours because stop-loss and margin calls were triggered. Bitcoin and Ethereum spearheaded the liquidations, causing cascading sell-offs that intensified the price drops across exchanges.
4. Are crypto prices today being affected by Federal Reserve decisions?
Yes, the Fed rate decisions influence risk assets like cryptocurrencies directly. When it is seen as hawkish, meaning fewer rate cuts, the investors go for less risk and move to safer assets, reducing liquidity and demand in the crypto market.
5. Is now the time to invest in Bitcoin?
While other traders see dips as buying opportunities, the current market sentiment is still guarded. Professionals would still advise waiting for signals of clear stabilization and further updates from the Fed before making major investment decisions.
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