Why Did Crypto Crash Today? Jerome Powell’s Speech Spark Panic Selling
The post Why Did Crypto Crash Today? Jerome Powell’s Speech Spark Panic Selling appeared first on Coinpedia Fintech News
The US Federal Reserve yesterday announced a rate cut of 0.25%, as expected. In the press conference organised to declare the rate cut, Fed Chairman Jerome Powell defended the decision, portraying it as an attempt to achieve a more balanced economic position. However, he revealed that the organisation would adopt a cautious approach while considering further rate cuts. Yesterday, both the US stock market and the cryptocurrency market suffered severe drops.
US Fed Rate Cut & Inflation Goals: What You Should Know
Yesterday, the US Fed Fund interest rate was brought down to 4.5%. It was the third major correction this year. Initially, on September 18, it was reduced to 5%. On November 7, it was lowered for the second time to 4.75%.
In the press conference, Powell emphasised the commitment of the organisation to support the economy and the job market in the country.
However, highlighting that the organisation has not decided on a strict plan for rate changes, he asserted the possibility of a further rate cut depends on three key factors: new economic data, the outlook for the economy, and risks to the economy and inflation.
At the start of this year, the US inflation rate was at 3.1%. It touched a yearly peak of 3.5% in March. Notably, between March and September, it had declined steadily. In September, it dropped to a yearly low of 2.4%. However, since then, the rate has increased consistently. In November, it reached 2.7%.
Market Reactions: Stocks and Crypto Plunge
On December 18, the day when the interest cut was officially announced by the US Fed, the crypto market declined by approximately 0.58%. At the beginning of yesterday, the price of Bitcoin was at $106,080.05. By the close, it slipped to as low as $100,207.97, marking a significant drop of 5.85%. Similarly, the S&P 500 index also plummeted by over 2.90% yesterday.
Altcoins Face Steeper Challenges
At the beginning of December 18, the total market cap of the crypto market excluding BTC was at $1.53T. At the time of the market closing, it came down to as low as $1.42T, recording a notable decline of 7.74%. In the last 24 hours, Ethereum has declined by over 4.7%, XRP by 6.8%, BNB by 1.6%, Solana by 3.3%, Dogecoin by 6.2%, and Cardano by 4.9%.
In conclusion, the Fed’s hawkish outlook suggests prolonged challenges for markets.
