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Bitcoin Crashes Below $100K Amid Massive Liquidations After Fed’s Hawkish Rate Cut

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  • Bitcoin drops to $100K as Fed signals longer inflation battle.
  • Market liquidations surge to $788M, with long positions hit hardest.
  • S&P 500 and gold see significant declines after Fed’s rate outlook shift.

The Fed’s recent rate cut sparked a sharp sell-off in Bitcoin, bringing its price back to $100K. Liquidations hit $788M, and both the S&P 500 and gold faced declines amid heightened inflation expectations for 2025.

Bitcoin Retraces to $100K After FOMC Rate Cuts

Bitcoin saw a sharp decline following the Federal Open Market Committee (FOMC) decision on a 25 basis point rate cut. Although the rate cut was widely anticipated in the market, Bitcoin price retraced to around $100,000 which represents a 5% drop within 24 hours. The cryptocurrency had previously surged above this level, but the rate decision pulled it back down.

The overall market reaction suggested that the investors had factored in the rate cut much earlier before the announcement. However, the real concern was the Federal Reserve’s revised expectations for 2025. Investors adjusted their expectations after the Fed’s new policy which led to a fall in the price of Bitcoin.

Total Market Liquidations Reach $788 Million in 24 Hours

After the Bitcoin price decline and overall market volatility of other altcoins, the overall market liquidations of various cryptocurrencies hit $788.04 million in the last 24 hours. The liquidations mostly came from long positions which contributed to $661.98 million while short positions accounted for only $126.05 million. The liquidation figures show the market’s reaction to the rate cut as well as the change in the investors’ sentiments.

The largest liquidation order during this period took place on Binance with nearly $7.10 million order on the ETH/USDT pair. These liquidations emerged from traders who exited from both long and short positions after the market adjusted to the Fed’s hawkish sentiment and higher-than-expected inflation projections for 2025.

S&P 500 and Gold Declines Following Rate Cut

The S&P 500 experienced a major decline after the Fed’s rate cut, falling below the $6,000 level for the first time since November 22. The decline in equities coincided with a drop in gold prices, which fell to $2,635.70 per ounce, the lowest level since November 25. Both asset classes responded negatively to the Fed’s updated economic projections..

The decline in the S&P 500 and gold illustrates the overall market anxiety triggered by the Fed’s change in focus to a cautious approach to interest rate cuts. The Fed’s revised expectations  for lower inflation in 2025 together with the potential constant higher rates contributed to the decline in traditional financial markets.