Crypto asset prices fell on Thursday, taking advantage of Wednesday’s market-wide sell-off sparked by Federal Reserve Chair Jerome Powell disappointing investors with his comments on expectations for interest rate cuts. United States for next year.
Bitcoin (BTC)’s attempt to recover above $100,000 quickly faded during the day and fell to $97,000 during the day in the US. It recovered modestly to around $98,000 before another leg lower took prices below $96,000, down 4.8% in the last 24 hours.
Altcoins fared much worse, with the broad-market CoinDesk 20 index falling more than 10% over the same period. Ethereum ether (ETH) fell 10.8% to below $3,500, while Cardano’s ADA, Chainlink’s LINK, Aptos’ APT, Avalanche’s AVAX and Dogecoin’s DOGE suffered losses of between 15% and 20%. Notably, SOL sank to its weakest price since Nov. 7, nearly erasing its post-election rally following a 26% drop from its all-time high reached less than a month ago.
In the past 24 hours, roughly since yesterday’s rate decision by Fed policymakers, nearly $1.2 billion in leveraged crypto derivatives trading positions across assets have been liquidated, CoinGlass data shows. More than $1 billion of them were long positions or bets that prices would rise.
In traditional markets, U.S. stock indices rebounded slightly from Wednesday’s lows but gave up some of their pre-market gains during the session. The S&P 500 and the tech-heavy Nasdaq are up 0.5% from Wednesday’s close.
Cryptocurrency prices have risen almost vertically since Donald Trump’s victory in the presidential election in early November, boosted by hopes for pro-crypto policies from his incoming administration. The Fed’s Wednesday projection of a slower pace of rate cuts next year and Powell’s hawkish tone on rising inflation expectations took many investors off their game, triggering a widespread sell-off in the cryptocurrency market, stocks and even gold.
The US dollar index (DXY), a key indicator of strength against a basket of foreign currencies, surpassed 108, its highest level since November 2022, while US 10-year Treasury yields also rose sharply above 4.6%, the highest since May.
“The cryptocurrency market has already been on tenterhooks over the possibility of a correction following bitcoin’s record high to $100,000,” Joel Kruger, market strategist at LMAX Group, said in a Thursday note. “We got that catalyst from the world of traditional markets… The consequences of the Fed’s decision on Wednesday were simply too much to ignore.”
“When you zoom out and consider year-over-year growth, a pullback like this seems healthy,” Azeem Khan, co-founder and COO of layer 2 network Morph, said in an email shared with CoinDesk.
“It’s also worth noting that, historically, year-end securities sell-offs can occur when investors offset losses against gains to reduce their tax liabilities,” Khan added. “While it is difficult to say to what extent this is driving the current trend, it could be a contributing factor.”
UPDATE (December 19, 20:12 UTC): Updates bitcoin prices in the headline and story with another leg down in the sell-off.
