The Recent Crypto Market Turbulence
The cryptocurrency market has experienced a sharp downturn, with a significant drop in prices across various digital assets. This decline comes on the heels of the Federal Reserve’s latest policy update, which has had a notable impact on the market.
Bitcoin and Ethereum Price Plunge
Bitcoin, the leading cryptocurrency, saw its price plummet by nearly 10%, hitting a low of $93,000. This represents a stark reversal from its recent high of $108,268 earlier in the week. Similarly, Ethereum faced an even steeper fall, dropping by almost 15% and reaching $3,100—its lowest position since late November.
Other Cryptocurrencies Affected
In addition to Bitcoin and Ethereum, other popular cryptocurrencies like Binance Coin (BNB), Solana (SOL), Dogecoin (DOGE), and Cardano (ADA) also recorded double-digit losses. Market data indicates that these assets experienced drops exceeding 10% in value.
Reasons Behind the Sell-Off
Market analysts attribute this widespread sell-off to the Federal Reserve’s tightened stance on monetary policy. The Fed’s decision to reduce its forecast for rate cuts in 2025 from four to two has added pressure to an already fragile market. Furthermore, the Fed’s clarification that it does not plan to support any proposed government Bitcoin reserve strategy has further dampened market sentiment.
Expert Insights
Markus Thielen, the head of research at 10x Research, emphasized the importance of Bitcoin’s current price level as a critical marker for risk management. He noted that the Fed’s firm policy stance, coupled with potential liquidity adjustments expected from the US Treasury in 2025, has increased market uncertainty.
Liquidation Frenzy Hits the Market
According to data from CoinGlass, the recent market turbulence led to over $1.2 billion in liquidations, impacting 377,618 traders. Long traders, who bet on price increases, suffered significant losses of approximately $1.07 billion, marking a notable setback for this group. Short traders, on the other hand, lost $163 million during the reporting period.
Among the cryptocurrencies, speculators on Bitcoin price suffered the most significant losses, with $279 million liquidated, including $227.5 million in long positions. Ethereum traders followed closely with $277 million in liquidations, including $248.7 million from long positions and $28.2 million from short positions.
Traders betting on Solana, XRP, and Dogecoin also incurred losses of $55 million, $36 million, and $80 million, respectively. The market’s recent volatility was further underscored by the most significant single liquidation involving a $15 million ETH-USDT transaction on Binance.
