Today, January 9, 2025, the cryptocurrency market is experiencing a significant price drop. The main reasons for this collapse are:
1. Federal Reserve (Fed) Decision: The recent Fed meeting resulted in a 25 basis point cut in the key rate to a range of 4.25-4.5%. While the rate cut is generally viewed positively, comments by Fed Chairman Jerome Powell about the persistence of inflation risks and caution in future policy have caused investor concern, which has negatively affected the cryptocurrency market.
2. Liquidation of long positions: The sharp price drop led to a massive liquidation of long positions in the Bitcoin futures market. Liquidations in 24 hours exceeded $850 million, which increased downward pressure on the market.
3. Fed Statements on Bitcoin: Fed Chairman Jerome Powell dismissed the possibility of adding Bitcoin to the US national reserve, citing the regulator’s lack of authority and desire to own cryptocurrencies. The statement dampened investor expectations for institutional adoption of Bitcoin.
4. MicroStrategy’s Plans: Reports emerged that MicroStrategy, one of the largest corporate holders of Bitcoin, may temporarily suspend purchases of the cryptocurrency, adding to the negative sentiment in the market.
These factors together led to today's collapse in cryptocurrency prices.