Federal Reserve Remarks Trigger Crypto Market Sell-Off

3 min read | December 21, 2024 04:15 AM AEDT | By Team Kalkine Media

Federal Reserve Remarks Trigger Crypto Market Sell-Off — Image source: Shutterstock

Major Cryptocurrency Losses

The cryptocurrency market has experienced a significant downturn, with major cryptocurrencies such as Bitcoin, Ethereum, XRP, Dogecoin, and Solana suffering substantial losses. Bitcoin, after briefly reaching an all-time high of over $108,000, dropped 7% in a single day to $97,000. Ethereum fell nearly 12%, trading at $3,422, while XRP saw a similar drop, down 11% to $2.22. Dogecoin, the popular meme coin, tumbled by 20%, landing at $0.31. Solana, another major altcoin, dropped below the $200 mark, down 12% to $191. These losses are part of a larger correction across the crypto market, which saw the entire sector fall by 9%.

Impact of Federal Reserve's Remarks

The downturn was triggered by Federal Reserve Chair Jerome Powell's recent remarks about inflation projections for 2025, which spooked markets. Powell's comments about inflation possibly being higher than expected and the likelihood of interest rates remaining high for longer led to a broad sell-off in risk assets, including cryptocurrencies. Meme coins like Dogecoin, known for their sensitivity to macroeconomic news, were hit especially hard. Dogecoin's price plummeted 12.4%, and trading volume surged 67%, indicating panic among holders. Despite this, Dogecoin remains one of the largest cryptocurrencies by market cap, valued at $46.6 billion.

Massive Liquidations

The market has also seen massive liquidations, with over $1.2 billion worth of crypto positions being wiped out in just 24 hours. Long positions accounted for the bulk of the liquidations, totaling $1.07 billion. The largest single liquidation order, occurring on Binance, was worth nearly $16 million. Additionally, Binance saw $83 million in outflows, showing a broader trend of selling pressure across exchanges.

Broader Market Impact

Other cryptocurrencies, including XRP and Cardano, have also suffered substantial losses. XRP, for example, experienced a 10% drop, while Cardano lost 15.7%. These declines were part of a wider downturn that affected most of the altcoin market. Meme coins like Shiba Inu and Bonk also saw significant losses, down 23.3% and 22.5%, respectively.

Notable Exceptions

Despite the sell-off, some altcoins are still gaining attention. One notable exception is Fartcoin, a meme coin that has gained 71% in the past week and is up 323% for the month. However, these gains are rare, and the overall sentiment in the crypto market remains bearish. As Bitcoin dropped below $100,000, the broader market is showing signs of vulnerability, and analysts are keeping a close watch on further developments.

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