As a seasoned crypto investor with a decade of experience under my belt, I’ve learned to navigate the volatile waters of the cryptocurrency market with a mix of caution and calculated risk-taking. The recent remarks by Jerome Powell have sent ripples through the market, causing a wave of panic that has left even the most hardened investors scratching their heads.
Despite the U.S. Federal Reserve lowering its key interest rates by 0.25% as anticipated, Jerome Powell’s comments had a significantly unfavorable effect on the entire cryptocurrency market.
The head of the central bank cautioned that there might be fewer interest rate reductions in 2025 following three successive cuts at the end of 2024. Moreover, he stated that the United States is prohibited from owning bitcoin, contradicting Donald Trump’s pledge to investigate the possibility of adding BTC to the country’s assets.
High-risk investments such as cryptocurrencies experienced sudden and significant price drops. For instance, Bitcoin fell from more than $105,000 to less than $99,000 for the first time since December 11. This decline is close to $10,000 when compared to its peak on Tuesday afternoon of over $108,000.
Instead, let me rephrase it for you: These alternative cryptocurrencies (altcoins) experienced a more significant downturn. Some of them dropped by double digits from their peak to their trough, with examples like XRP, DOGE, AVAX, PEPE, LTC, and LINK among the affected.
It’s worth noting that Santiment expressed their opinion on the correction and suggested that the last four could be the ones to gain from it, should the market downturn caused by the Fed turn out to be an overreaction.
If it turns out that this response was excessive, then it’s likely that the projects experiencing the most significant declines could potentially offer the best opportunities for making substantial investments.
Following the reduction in interest rates by the Federal Open Market Committee (FOMC), both cryptocurrency and stock traders found themselves a bit apprehensive. This wasn’t primarily due to the recent cuts, but rather because Jerome Powell forecasted that there would be only half as many rate cuts in 2025 as previously anticipated.
Altcoins, in particular, have gotten…
— Santiment (@santimentfeed) December 19, 2024
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2024-12-19 09:50