Here’s how the crypto market reacted to the Fed’s 0.25% cut

After the Fed cut the interest rate by 0.25%, the crypto market liquidated more than $239 million in a matter of minutes. Bitcoin briefly dropped below $100,000, and other major tokens followed suit.

On December 19, the Federal Reserve cut its key interest rate by 25 basis points and warned of further cuts in coming years. The Fed has signaled that it will probably only cut interest rates twice as much in the coming new year.

Fed Chairman Jerome Powell said the agency can afford to “be more cautious in considering further adjustments to our policy rates” as the U.S. government’s stance becomes less restrictive.

“We think the economy is in good shape” [a] really good place. “We think the policy is in a really good place,” he said.

According to Coinglass data, following the Fed rate cut, the crypto market saw the total long liquidation increase by $200 million, from just $39.73 million to a staggering $239.2 million, just 30 minutes after the news broke. A total of $853 million in crypto asset liquidations occurred in the last 24 hours, with Ethereum (ETH) leading the way with $134.9 million.

Chart showing total crypto asset liquidations over the last day in 15-minute intervals, December 19, 2024 | Source: Coinglass.

According to Crypto.news data, Bitcoin (BTC) fell 5% below the $100,000 threshold but soon recovered slightly. Bitcoin is currently trading at $101,705 and its price is down 2.35% in the last 24 hours of trading.

Other major cryptocurrencies followed Bitcoin’s decline, including Ethereum, Solana (SOL), and XRP (XRP). Additionally, some altcoins such as DOGE (DOGE) and PEPE (PEPE) also suffered after the Fed’s cut.

Ethereum fell 0.68% following the Fed rate cut. In the last 24 hours, Ethereum dropped by 4.5% and its price remained at $3,674. Meanwhile, XRP saw its price fall by around 3%. In the last 24 hours of trading, XRP is down nearly 7%, falling to $2.36.

Solana was not immune from the effects of the Fed’s cut, either. The favorite cryptocurrency saw its price fall by 1.15% and continued the downward trend up to 3.58% in the last 24-hour trading. The token is currently trading at $208.98.

According to CoinMarketCap, the total market value of meme coins decreased by approximately 8% to $105.2 billion, while the altcoin market was also negatively affected. Dogecoin, the number one meme coin by market cap, fell more than 7% shortly after the Fed’s cut and has not recovered since. DOGE is currently trading at $0.36.

Meanwhile, PEPE fell nearly 4% shortly after the Fed’s cut and is down more than 11% in the last 24 hours, according to crypto.news data.

The Fed’s cautious approach to future rate cuts indicates a continued focus on controlling inflation, which could lead to a strengthening of the dollar. This could indicate a potential decline in the public’s investment in alternative assets such as cryptocurrencies.

Disclosure: This article does not constitute investment advice. The content and materials on this page are for educational purposes only.