The cryptocurrency market experienced a sharp downturn following the Federal Reserve's announcement of a 0.25% interest rate cut on December 19, triggering massive liquidations and price drops across major digital assets.
Within just 30 minutes of the Fed's announcement, the crypto market saw liquidations surge from $39.73 million to $239.2 million. The total liquidations over 24 hours reached $853 million, with Ethereum leading at $134.9 million.
Bitcoin briefly dipped below the $100,000 mark, falling 5% before showing modest recovery to $101,705. The leading cryptocurrency ended the 24-hour period down 2.35%.
The ripple effect spread to other major cryptocurrencies:
- Ethereum declined 4.5% to $3,674
- XRP fell nearly 7% to $2.36
- Solana dropped 3.58% to $208.98
The meme coin sector took an especially hard hit, with its total market cap falling 8% to $105.2 billion. Popular meme tokens DOGE and PEPE saw notable declines:
- Dogecoin fell over 7% to $0.36
- PEPE dropped more than 11%
Fed Chair Jerome Powell's comments suggested a cautious approach to future rate adjustments, noting that "policy is in a really good place." The Fed indicated only two more potential rate cuts in the coming year.
Market analysts suggest the Fed's conservative stance on future rate cuts could strengthen the U.S. dollar, potentially reducing investor appetite for crypto assets as alternative investments.