Crypto Market Faces Turbulence: Ethereum and Major Altcoins Plunge

The cryptocurrency market has recently experienced a significant downturn, with Ethereum and other major cryptocurrencies suffering substantial price drops. This decline follows a broader market selloff triggered by comments from Federal Reserve Chair Jerome Powell regarding interest rate expectations, leading to a wave of liquidations in leveraged positions across the crypto space.

Key Takeaways

• Bitcoin dipped below $96,000, marking a 4.8% decline in 24 hours.

• Ethereum's price fell by 10.8%, dropping below $3,500.

• Major altcoins like Cardano, Solana, and Dogecoin saw losses ranging from 15% to 27%.

• Nearly $1.2 billion in leveraged crypto positions were liquidated following the Fed's announcement.

Market Overview

On December 19, 2024, Bitcoin's price attempted to recover above $100,000 but quickly fell to the low $97,000s. After a brief recovery to around $98,000, it ultimately dropped below $96,000. This decline was part of a broader market correction that saw the CoinDesk 20 Index, which tracks a variety of cryptocurrencies, plunge over 10%.

Ethereum (ETH) was not spared, experiencing a 10.8% drop, while other altcoins like Cardano (ADA), Chainlink (LINK), and Dogecoin (DOGE) faced even steeper declines, with losses between 15% and 27%. Notably, Solana (SOL) fell to its lowest price since November 7, erasing much of its post-election rally gains.

Factors Behind The Decline

The selloff was largely attributed to hawkish comments made by Fed Chair Jerome Powell during a recent meeting, which disappointed investors who were hoping for more aggressive rate cuts in the coming year. Powell's remarks indicated a slower pace of rate cuts than previously anticipated, which rattled investors across various asset classes, including cryptocurrencies.

In the wake of the Fed's announcement, nearly $1.2 billion worth of leveraged crypto derivatives positions were liquidated, with over $1 billion of those being long positions, indicating that many traders had bet on rising prices.

Traditional Markets Reaction

While U.S. stock indexes showed slight recovery from their lows, they ultimately gave back some of their gains during the session. The S&P 500 and tech-heavy Nasdaq both rose by 0.5% compared to their previous close, but the overall sentiment remained cautious as investors digested the implications of the Fed's comments.

Looking Ahead

Market analysts suggest that while the current pullback may seem alarming, it could be a healthy correction following the rapid price increases seen in recent months. Joel Kruger, a market strategist at LMAX Group, noted that the crypto market had been on edge, anticipating a correction after Bitcoin's surge past $100,000.

Azeem Khan, co-founder of the layer-2 network Morph, emphasized that year-end selloffs are not uncommon as investors look to offset losses against gains for tax purposes. This historical trend may also be contributing to the current market dynamics.

As the crypto market navigates this turbulent period, traders are advised to remain cautious until inflation concerns are addressed and more concrete policies emerge from the incoming administration. The interplay between traditional financial markets and cryptocurrencies will continue to be a focal point for investors in the coming weeks.

Sources

• Bitcoin (BTC) Dips Below $96K, Ethereum's ETH, Cardano's ADA, Dogecoin Tumble Over 10% in Crypto Correction, CoinDesk.

• BTC, DOGE, XRP News: Dogecoin Plunges 27%, XRP and Bitcoin Dip 10% in Crypto Bloodbath, CoinDesk.

• Bitcoin (BTC) опустився нижче 96 тисяч доларів, Ethereum ETH, Cardano ADA, Dogecoin впали на 10% у Крипто, CoinDesk.

• Bitcoin (BTC) упал ниже $96 тыс., ETH Ethereum, ADA Cardano, Dogecoin упали более чем на 10% в ходе коррекции Криптo, CoinDesk.

• Bitcoin (BTC) Bumababa sa $96K, Ethereum's ETH, Cardano's ADA, Dogecoin Tumble Over 10% sa Crypto Correction, CoinDesk.