Over $865 million of perpetual contracts were liquidated following Jerome Powell’s speech after the last FOMC meeting. Longs took the biggest hit at around $744 million, while shorts accounted for around $121 million. The fact that longs were more massively liquidated suggests that many traders were caught off guard by the market’s sudden move.
The Federal Open Market Committee (FOMC) meets eight times annually. During these meetings, the committee thoroughly examines economic and financial conditions, formulates monetary policy decisions, and evaluates potential risks to achieving its objectives of long-term price stability and sustainable economic growth.
Powell’s Speech Sparks Crypto Market Dip
The recent drop in the value of Bitcoin and other assets like ETH, SOL XRP, and DOGE can be attributed to the Federal Reserve’s cautious stance on future interest-rate reductions. Powell’s shift triggered a retreat in crypto investments, leading to a drop in Bitcoin’s value of over 5%. According to CoinMarketCap, the largest crypto dipped to a low of $99,047.
The Fed’s decision to lower interest rates again while hinting at fewer future cuts has created uncertainty in the market. This has made investors cautious and led to increased volatility. Chair Jerome Powell emphasized the need for further progress on inflation before making further rate reductions.
However, despite the recent dip, Bitcoin has experienced significant growth since the United States election, surging 50% in value and reaching a record high of $108,316 earlier this week. President-elect Donald Trump’s pledge to free crypto from U.S. regulatory shackles has buoyed investor confidence, with some experts predicting a good floor and outlook for Bitcoin.
Not Only the Crypto Market
The impact of Powell’s speech was not limited to the crypto market; it had far-reaching consequences across various sectors. The stock market plummeted by 3% while yields on the 10-year treasuries reached their highest in seven months. The recent market reaction is the worst after-meeting selloff since the onset of the pandemic.
Tom di Galoma, head of fixed income at Curvature Securities, noted that markets were unprepared for the latest Fed announcement. While officials predicted only two rate cuts over the next 12 months, Galoma said: “Powell is moving to neutral and waiting for the next administration to push their agenda and see then what he may need to do.”
On the other hand, BTC is currently trading at $101,751, indicating some support below $100,000.
