The recent drop in the cryptocurrency market is mainly due to the Federal Reserve's monetary policy announcement. Despite a 0.25% reduction in interest rates, Fed Chairman Jerome Powell's firm tone and signaling of more limited cuts for 2025 have shaken investors' spirits.
As a result, Bitcoin fell below $94,000, while Ethereum retreated to around $3,350. Total market capitalization also took a hit, hitting $3.3 trillion, the lowest level in nearly a month.
Other factors that help explain this movement include:
Global Tight Liquidity Conditions: Central banks continue to shrink their balance sheets, while bond market volatility increases, making the outlook for risk assets more difficult.
Market Fragility: Excessive use of leverage and some structural vulnerabilities have intensified selling pressure.
Reduced Liquidity Before the Holiday: With less liquidity in the market, the downward trend worsened.
It’s worth remembering that volatility is part of the crypto market. While the current scenario may seem challenging, industry history and fundamentals suggest there is room for recovery. Stay calm and focus on the long term!
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