Crypto Market Crash: Bitcoin, ETH, XRP, DOGE, SOL Trigger $860M In Liquidations

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As a seasoned analyst with over two decades of experience in the financial markets, I’ve seen my fair share of market fluctuations and crashes. The recent crypto market crash, triggered by the Federal Reserve’s rate cut announcement, is no exception.

Following the Federal Reserve’s decision to lower interest rates by 0.25% on Wednesday, the price of Bitcoin dropped below $100,000, causing a domino effect in the broader cryptocurrency market. The increased selling was likely due to investors reacting to the Fed’s hints about its monetary policy plans for the years leading up to 2025.

In addition to Bitcoin, various alternative cryptocurrencies (altcoins) have experienced a significant decline, dropping by 10% or more. Notable altcoins like Ethereum (ETH), Dogecoin (DOGE), XRP, Solana (SOL), and others fell between 5-10%, leading to over $860 million worth of liquidations.

Crypto Market Crash Saw Over $860 Million in Liquidation

Bitcoin Price Drops Following Fed’s Hawkish Stance for 2025

On Wednesday, it was announced by the U.S. Federal Reserve that they would lower interest rates by 0.25% for a third time, as previously suggested. Jerome Powell, Fed Chairman, hinted at a more cautious approach in 2025, implying fewer rate cuts than initially anticipated – only two instead of the expected four.

In my analysis, surpassing the critical support of $100K levels was more than enough to trigger a steep decline in Bitcoin’s price. Consequently, this latest correction has erased all the weekly gains for BTC, following its all-time high above $108K that was achieved just a few days ago.

According to Jerome Powell, the Federal Reserve is determined to reduce inflation down to its preferred 2% level. Furthermore, Powell suggested that it may take another 1-2 years for this 2% inflation rate to be achieved, which contributes to a more aggressive or “hawkish” stance.

BTC Performs Better Than S&P 500 Despite Crypto Market Crash

As a crypto investor, I found it intriguing when Santiment, the blockchain analytics platform, highlighted that Bitcoin (BTC) displayed a stronger relative performance compared to the decline in the S&P 500. This could potentially signal resilience once the market turbulence subsides over the next 24-48 hours, according to their analysis.

Furthermore, most U.S. Bitcoin Exchange-Traded Funds (ETFs), such as Bitwise’s BITB, Invesco’s BTCO, Ark Invest’s ARKB, and Grayscale’s GBTC experienced net withdrawals today amid the crypto market downturn. However, BlackRock’s IBIT bucked the trend with a significant $356 million in inflows, mitigating the overall negative influence. Even in these turbulent times, crypto market analysts maintain their optimistic outlook.

Popular economist Alex Kruger wrote:

“Next week is Christmas, and this might alter the current situation. In my opinion, it would be perfect if Bitcoin (BTC) rebounded around 98 and Solana (SOL) around 195. After that, I expect only an upward trend until inauguration. The euphoria and excessive leverage in crypto have already been reduced significantly, which should help minimize potential losses. Regarding the broader picture, my opinion remains unchanged.

Bank of Japan Keeps Interest Rates Unchanged

On Thursday, the Bank of Japan decided to keep its short-term interest rate at -0.1%, preferring to watch closely the progression of wage increases and inflation rates before considering any changes. This anticipated move reflects their careful handling of monetary policies.

In response, the yen continued to weaken, falling below the significant 155 level compared to the dollar, because the central bank decided not to increase borrowing costs at this time.

Due to recent events, the price of Bitcoin (BTC) rebounded from its lows below $100,000 and is now being traded at $101,020 at this moment. According to data from Coinglass, the 24-hour BTC liquidations have reached a staggering $148 million, with long positions accounting for approximately $114 million of those liquidations.

Altcoins Register Steeper Fall Than Bitcoin

Today, Bitcoin’s price dropped, but the decline was more significant for other cryptocurrencies like Ethereum (ETH), Dogecoin (DOGE), Ripple (XRP), and Solana (SOL) which experienced a fall of 5-10%. Other altcoins in the market saw even steeper corrections, with some plunging by as much as 10-20% during today’s crypto market downturn.

According to Santiment, a key supplier of crypto market statistics, there was a substantial decrease in several prominent altcoins during the last 24 hours. Specifically, Avalanche (AVAX), Chainlink (LINK), and Litecoin (LTC) each dropped by approximately 16%, whereas the meme coin Pepe (PEPE) experienced a more significant decline of around 17%. This suggests that the market as a whole is experiencing considerable volatility.

Santiment observed that although the recent downturn might be severe, it could potentially provide a window for investors looking to buy at a discount. The report implied that if the current market reaction was excessive, then the projects experiencing the greatest declines may present the most enticing investment opportunities.

Due to high volatility in the cryptocurrency market, total liquidations reached an astounding $860 million over the past day, as per data from Coinglass. This surge includes $684.93 million in long liquidations and a further $200 million in short liquidations during the recent crypto market downturn.

According to CoinGape’s report, the Altseason Index has dropped to 55, causing some to question whether the altcoin season has concluded. Based on Blockchain Center’s data, the current index stands at 55, testing the significant support level of 50. However, crypto market analysts believe we might see a rebound from this point.

ETH Price Bounces Back from Crucial Support Levels

The cost of ETH plunged by about 6%, but it recovered from a vital support level at $3,550. Cryptocurrency expert IncomeSharks emphasized Ethereum’s durability during recent market turbulence, pointing out that the Supertrend signal remains robust and optimistic.

The analyst noted that Ethereum ($ETH) hasn’t breached its Super Trend yet, which continues to suggest a positive market direction. At present, the price is stabilizing above the support, making it unwise to engage in short-selling.

XRP Price Rally to Continue Amid Crypto Market Crash?

In the midst of a significant downturn in the cryptocurrency market, the price of XRP has fallen by 6.2% to reach approximately $2.25. Notably, crypto analyst IncomeSharks has pointed out an important moment for XRP as it approaches its Supertrend support level.

If bulls successfully protect this crucial support level and form an optimistic consolidation phase, it may offer a compelling reason for investors to consider re-entering, as suggested by the analyst. Furthermore, another analysis indicates that the price of XRP could potentially surge towards $6.

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2024-12-19 09:12