Is The Crypto Bull Run Over? Top Exec Discusses The Crash
The broader cryptocurrency market experienced a notable downturn following yesterday’s Federal Open Market Committee (FOMC) meeting on December 18. After the Fed cut interest rates by 25 basis points as expected, it also signaled that interest rate cuts in 2025 would be smaller than previously expected.
Affected by this, the price of Bitcoin fell by more than 5%, falling below the $100,000 mark, and then showed slight signs of recovery. Altcoins saw double-digit percentage losses across the board.
Although the Fed’s decision met expectations of a 25 basis point interest rate cut, it represents a significant change in the expected trajectory of interest rates next year. The central bank now expects only two rate cuts instead of the four previously announced, signaling a more cautious stance. The future readjustment of monetary policy had a knock-on effect across the risk asset spectrum, sending the S&P 500 down 3% and the Russell 2000 small-cap index down 4.4%.
Is the cryptocurrency bull market over?
In the cryptocurrency world, the consequences are immediately apparent. Matt Hougan, Chief Investment Officer, Bitwise Asset Management Resolved Market Conditions This Morning via , statement from the Federal Reserve caused All risk assets have pulled back sharply. “
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Hogan said Bitcoin’s price action reflects a high degree of sensitivity to changes in monetary conditions. He pointed out that the liquidation of leveraged positions exaggerated the decline in Bitcoin prices. “$600 million in leveraged long positions were wiped out in the market today, exacerbating the pullback.”
Despite the sharp correction, Hougan believes the broader outlook remains constructive: “Cryptocurrencies now have internal momentum and today’s announcement will not interrupt the larger trend: Washington Backs Cryptocurrency Reversal policies, increasing institutional adoption and ETF flowsgovernment and corporate purchases of Bitcoin, and major technological breakthroughs in programmable blockchain. “
He pointed to technical indicators as support for his thesis: “My favorite momentum indicator remains positive: Bitcoin’s 10-day exponential moving average ($102,000) remains above the 20-day exponential moving average ($99,000). “
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Hogan concluded by insisting that the shift in Fed expectations would not derail the long-term bull market, saying: “Cryptocurrencies are in a multi-year bull market. An expected 50 basis point rate cut will not change that.”
Other market watchers offered similar explanations for the Fed’s communications strategy. Warren Pies, founder of 3Fourteen Research, commented via
Prominent macro analysts echo this sentiment. Cryptocurrency analyst and podcaster Fejau (@fejau_inc) describes the central bank’s approach as a strategy designed to guide market expectations: “The Fed was forced to cut rates this week, so despite today’s cut, it’s still using a hawkish 2025 FFR dot plot forecast To drive down long-term bond yields (…) Welcome to Macro Psychological Warfare, Smoke and Mirrors.”
He describes the dot plot as a psychological influencing tool rather than a strict road map: “It is important not to think of the dot plot as a prediction of future events but as a psychological tool (…) The Fed has bought themselves time to take further action (…) before they actually take action, which almost guarantees that 2025 will not happen as they predict.”
Andreas Steno Larsen, CIO of Steno Global Macro Fund and CEO of Steno Research, supply Similar assessment: “By significantly raising all forecasts, the Fed has significantly lowered the threshold for cutting interest rates next year. This is a smart move if you want to cut spending further but don’t want to pre-commit.”
At press time, Bitcoin was trading at $101,766.
Featured image created using DALL.E, chart from TradingView.com
