Why Is Crypto Down Today: Key Factors Driving Bitcoin's Drop
Why Is The Crypto Market Down Today: Why Bitcoin Price Is Falling
Cryptocurrency Market Declines Amid Federal Reserve Rate Cut Announcement
December 19, 2024: The cryptocurrency market witnessed a significant downturn over the last 24 hours, with major assets like Bitcoin (BTC), Solana (SOL), Ethereum (ETH), and XRP experiencing sharp losses. The global cryptocurrency market capitalization dropped 4.60%, now standing at $3.68 trillion, reflecting growing uncertainty among investors.
Bitcoin Drops Below $100,000
Bitcoin (BTC) fell below the crucial $100,000 mark after the Federal Reserve announced a 25-basis-point rate cut, aligning with market expectations. The Fed further adjusted its future outlook, projecting only two rate cuts in 2025 compared to the previously anticipated four cuts, creating mixed market reactions.
Federal Reserve's Stance on Bitcoin Ownership
Federal Reserve Chairman Jerome Powell's comments added further weight to the market’s decline. Powell clarified that the U.S. central bank does not support or intend to adopt laws permitting large-scale Bitcoin ownership. He stated, “That’s the kind of thing for Congress to consider, but we are not looking for a law change at the Fed.”
This statement dashed hopes for the creation of a “Strategic Bitcoin Reserve,” signaling the Fed’s reluctance to align Bitcoin with traditional reserves like gold. Powell emphasized the central bank’s firm stance, leaving such decisions to the incoming administration under President-elect Donald Trump.
Surging Liquidations and Open Interest
The market turbulence resulted in the liquidation of 276,954 traders over the past 24 hours, with total liquidations amounting to $803.08 million. Meanwhile, BTC Futures Open Interest reached $66.89 billion, showcasing increased speculative trading and heightened market activity, even as prices tumbled.
Fear and Greed Index Remains High
Despite the bearish market conditions, the Fear and Greed Index stood at 75, indicating continued greedy sentiment. This contrast highlights the persistent optimism in the market, though it could amplify risks during periods of heightened volatility.
The Binance BTC/USDT Liquidation Heatmap shows concentrated liquidation activity near $102,000, with intensified zones below $100,000. This highlights heavy pressure from leveraged positions being closed, amplifying Bitcoin's volatility. The chart underscores a turbulent market environment driven by aggressive trading and significant price fluctuations over the past 24 hours.
