Crypto Market Tumbles After Fed Signals Rate-Cut Caution

The cryptocurrency market tumbled on Thursday after the Federal Reserve lowered interest rates on Wednesday but expressed caution about further cuts next year.

Bitcoin (BTC) fell 4.3% in the past 24 hours, trading at around $99,700, down from its all-time high of $108,000 on Wednesday. Ethereum (ETH) declined 7.3% to $3,579. XRP dropped 6.8% to $2.31, and Solana decreased by 5.4%, now priced at $204.

The overall cryptocurrency market cap fell 5.6% to $3.64 trillion, according to CoinGecko, reflecting broad market weakness.

In the past 24 hours, 266,383 traders were liquidated, with total losses reaching $791.36 million, according to CoinGlass data. BTC accounted for $153 million in liquidations, while ETH followed with $126.4 million. The largest single liquidation order, valued at $7.10 million in ETHUSDT, occurred on Binance.

“Crypto’s pullback this morning reflects a broader trend across risk markets, as the expectation of slower monetary easing weighs on investor sentiment,” said Joe Flanagan, the CEO and executive chairman of Maple Finance. “However, it’s worth noting that crypto markets have matured, with institutional players increasingly viewing digital assets as a hedge against prolonged economic uncertainty.”

Flanagan added that the Fed’s stance could further fuel interest in decentralized financial tools that thrive in a climate of monetary rigidity, “highlighting crypto's long-term relevance as an alternative financial ecosystem.”

The Fed’s Moves

The Federal Reserve reduced its benchmark interest rate by 0.25 percentage points to a target range of 4.25%–4.5%, the lowest since February, 2023. This marks a total decline of one percentage point since September, according to a Federal Reserve press release. This was the third time the Federal Reserve cut the rate this year.

Still, the Fed projected only two rate cuts in 2025, down from four as previously forecast, according to the central bank’s medium projection, or so-called dot-plot. Higher rates are usually a negative sign for risk assets as investors are more incentivized to keep funds in deposits rather than spend or take on leverage.

“It's kind of common sense that when the path is uncertain, you go a little bit slower," Fed chairman Jerome Powell said Wednesday at a press conference. "It's not unlike driving on a foggy night or walking into a dark room full of furniture."

Powell also dismissed the possibility of the central bank adding BTC to its balance sheet, citing legal restrictions under the Federal Reserve Act.

"We’re not allowed to own Bitcoin. The Federal Reserve Act says what we can own, and we’re not looking for a law change," Powell said. "That’s the kind of thing for Congress to consider, but we are not looking for a law change at the Fed."

The Federal Reserve's recent actions come just days after president-elect Donald Trump expressed interest in establishing a strategic Bitcoin reserve, signaling a potential shift in the U.S. government's approach to cryptocurrency.