Bitcoin's Decline: Factors Behind the Drop Below $100,000

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by Giorgi Kostiuk

2 years ago

Bitcoin briefly fell below $100,000, reaching $98,839. This was influenced by recent statements from the US Federal Reserve regarding plans for policy tightening in 2025.

Market Reaction to Fed's Announcement

The US Federal Reserve confirmed its intention to significantly reduce easing measures in 2025. The 25-basis point rate cut matched expectations, but the updated dot plot showed a 50-basis point increase, surprising the markets. This led to a sharp rise in the 10-year US Treasury yield and the US dollar, while cryptocurrencies and stocks fell significantly.

Impact of Powell's Comments

In a press conference, Fed Chair Jerome Powell compared the economic situation to 'driving on a foggy night,' emphasizing the need for caution. Bitcoin's price recovered to $101,393 after some growth. Along with Bitcoin, several altcoins experienced significant drops: Ether fell 6.5%, and XRP dropped 12.64%.

Arthur Hayes's Predictions

Arthur Hayes, former CEO of BitMEX, believes that a significant market downturn in cryptocurrencies could occur in January during Donald Trump's inauguration. His forecasts are based on investors' expectations and the actual political situation. In his view, the realization of limited time for Trump to implement changes will lead to a sharp sell-off in cryptocurrency markets.

The announcements by the US Federal Reserve have significantly impacted cryptocurrency markets, causing a temporary drop in Bitcoin below $100,000. Attention to further actions by regulators and political changes remains a vital factor for market participants.

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