Crypto markets experienced another downturn on Thursday, extending the sharp declines that began on Wednesday after Federal Reserve Chair Jerome Powell dampened expectations for interest rate cuts in 2024.
Bitcoin (BTC) briefly attempted to regain the $100,000 mark earlier in the day but fell back to the low-$97,000 range during U.S. trading hours. It managed a slight recovery to around $98,000, though it remained 4.8% lower over the past 24 hours.
Altcoins took a harder hit, with many dropping more than 10% during the same period. Ethereum’s ether (ETH) fell 10.8%, slipping below $3,500, while other popular tokens like Cardano’s ADA, Chainlink’s LINK, Aptos’ APT, Avalanche’s AVAX, and Dogecoin’s DOGE posted losses of 15%-20%. Solana’s SOL was among the hardest hit, dropping to its lowest price since early November after losing 26% from its record high reached just weeks ago.
In the past day, leveraged crypto derivatives have seen heavy liquidations. Data from CoinGlass reveals that nearly $1.2 billion in trading positions were wiped out, with over $1 billion of those being long bets anticipating rising prices.
Traditional financial markets also faced turbulence. U.S. stock indices, including the S&P 500 and Nasdaq, saw modest gains early in the session but gave back some of those as trading progressed. Both ended roughly 0.5% higher than Wednesday’s close.
Crypto prices have seen substantial gains since Donald Trump’s presidential election win in early November, spurred by optimism about potential pro-crypto policies from his administration. However, the Federal Reserve’s announcement of a slower-than-expected pace for rate cuts and Powell’s warnings about rising inflation led to widespread selloffs across cryptocurrencies, equities, and even gold.
The U.S. dollar index (DXY), a measure of its value against a basket of major currencies, surged to its highest level since November 2022, exceeding 108. At the same time, 10-year Treasury yields climbed above 4.6%, the highest point since May.
Joel Kruger, a market strategist at LMAX Group, noted in a Thursday briefing that Bitcoin’s remarkable run to $100,000 had already raised concerns about an imminent correction. “The Fed’s hawkish outlook provided the perfect catalyst for a broader market pullback,” he explained.
Some analysts, however, see this decline as part of a healthy market cycle. “When viewed in the context of year-over-year growth, this type of pullback can be beneficial,” Azeem Khan, co-founder and COO of layer-2 network Morph, said in a statement shared with CoinDesk.
Khan also pointed out that year-end selloffs are not uncommon as investors look to balance losses against gains for tax purposes. “It’s difficult to gauge how much this is influencing the current trend, but it’s likely playing a role,” he added.
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