Is the Bull run Finished? Rate Cuts Drag Down Crypto Markets – Here’s the Reason Behind Crypto’s Decline
Retail markets are experiencing turmoil, and experts are wondering why crypto values have decreased following the FOMC rate cuts that failed to stimulate price movements.
This week, crypto’s upswing faced a harsh policy wake-up call. The US rate cut, coupled with a cautious statement from the Federal Reserve, resulted in declines for BTC, Ether, and most alternative coins.
On Thursday, October 30, worldwide crypto markets plummeted after the Fed announced a 25 basis point rate reduction. Chair Jerome Powell cautioned that another cut in December is “not a certainty.”
That statement quickly altered trading market sentiment. By the end of the trading session, Bitcoin’s price dipped to the $107,000–$109,000 range.
Conversely, Ether decreased to around $3,700–$3,900 as traders reduced risk across major exchanges.
How Much Value Did the Crypto market Lose Following the Fed Announcement? Why is Crypto Declining?
The downward pressure began a day earlier, when the Fed announced its cut on Wednesday, October 29. This action alone would typically bolster risk assets.
However, the subsequent message proved to be more significant. Treasury yields and the dollar increased, indicating that market participants saw fewer immediate easing possibilities.
The central bank adjusted its target range to 3.75%-4.00% and stated that the balance-sheet tapering will conclude on December 1. Nonetheless, Powell’s comments dampened expectations for a second consecutive cut.
Data from CME’s FedWatch Tool indicates the likelihood of a December cut has decreased from nearly guaranteed to around two-thirds to 70%.
This shift prompted investors to liquidate positions, putting additional downward pressure on crypto values.
BTC momentarily surged toward $110,000 before retracting, responding to the Federal Reserve’s recent indications.
This move wiped out over $80 billion from the overall crypto market capitalization. Alternative coins were affected more severely, with assets like XRP and SOL being among the poorest performers.
Information from both spot and derivatives markets revealed significant liquidations, primarily concentrated around the $109,000 mark.
Stocks linked to the sector also experienced declines. Coinbase and Strategy (previously MicroStrategy) retreated alongside the broader crypto market.
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Crypto Fear and Greed Chart
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The Fed’s update validated a 25 basis point reduction. It also mentioned an operational adjustment scheduled for December 1, when the central bank will cease quantitative tightening by reinvesting principal into Treasury securities.
Bitcoin is currently trading around $108,000 following another dip. Analyst Michael Van de Poppe displayed a six-hour chart illustrating critical price zones.
He noted that the recent movement stalled at the $111,900-$112,000 range, which serves as a significant barrier before BTC can strive for a new all-time peak.
He emphasized that this price ceiling must be breached for the trend to continue upward.
The chart indicates price drifting toward support near $107,000, a region where buyers have previously intervened.
If this base level level falters, Van de Poppe points out a broader market demand area around $103,000–$104,000. A movement into that zone would likely be prompted by a available volume sweep. The downside targets he identified are $103,000 and, in a more significant decline, about $100,700.
Recent trading activity has been chaotic. Bitcoin soared above $123,000 but soon after declined, leaving a series of lower highs. This indicates some short-term weakness. Sellers re-entered around the $118,000–$119,500 range, maintaining price limitations.
Trading volume appears stable, suggesting a lack of strong buying momentum during this pullback.
A significant upward movement zone remains near $119,500. A rebound above this level would indicate that momentum is improving. For now, the overall outlook seems positive. Van de Poppe anticipates strength in November and notes that dips could be worth monitoring. However, if BTC slips below the $107,000 mark, downside risks would increase.
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The article Is It All Over For the Pump? Rate Cuts Sink Crypto Markets – Here’s Why Crypto is Down originally appeared on 99Bitcoins.
