- Last Wednesday’s Fed interest rate decision caused a shockwave in the cryptocurrency markets.
- Bitcoin (BTC) price plummeted by 3%, driven by Fed Chairman Jerome Powell’s decision to keep interest rates unchanged and hint at potential future rate cuts.
- This downturn resulted in a $56 million Bitcoin liquidation over the past 24 hours.
Explore the impact of the Fed’s interest rate decision on the cryptocurrency market and understand the subsequent liquidation trends in Bitcoin and other major cryptocurrencies.
Federal Reserve’s Decision Impacted Bitcoin Significantly
The Federal Reserve’s decision to maintain interest rates led to a sell-off in the cryptocurrency market. This sell-off was not confined to Bitcoin alone; altcoins also experienced similar pressure, resulting in a total liquidation amount of $193 million. Bitcoin and Ethereum were the primary contributors to this liquidation, with Bitcoin accounting for $45 million in long position liquidations and Ethereum facing a $55 million liquidation, predominantly from long positions.
Mt. Gox Settlements Further Affect Bitcoin
Additional downward pressure on Bitcoin came from the bankrupt cryptocurrency exchange Mt. Gox. The company made an announcement on July 31st regarding the repayment of Bitcoin and Bitcoin Cash. Over the past month, more than 17,000 creditors received distributions. Bitcoin critic Peter Schiff voiced skepticism about the potential rate cuts in September, questioning Fed Chair Powell’s confidence in achieving inflation targets.
Altcoin Market Experiences Turbulence
Not just Bitcoin, but other cryptocurrencies like Solana and XRP also faced sharp declines. Solana dropped by 6.6%, and XRP, which had gained over 30% in July due to favorable developments in the Ripple-SEC case, saw significant losses, wiping out a substantial portion of its gains. The overall volatility has left investors anxious, with experts suggesting that future market movements will heavily depend on Federal Reserve statements and economic indicators.
Performance of Selected Altcoins Amid Market Downturn
Despite the broad market downturn, certain altcoins like Beam, Kaspa, Notcoin, and eCash managed to register gains, showing resilience in a predominantly bearish market. In contrast, cryptocurrencies such as Popcat, Mog Coin, dogwifhat, and THORChain experienced more substantial losses. This variation in performance underscores the diverse reactions within the crypto asset class to market-wide events.
Conclusion
The recent Federal Reserve interest rate decision has undeniably caused a significant downturn in the cryptocurrency markets, with Bitcoin and several altcoins experiencing sharp declines and high liquidations. Although some altcoins showed resilience, the overall market sentiment remains cautious. Moving forward, market participants will closely monitor Fed communications and broader economic indicators to gauge future trends.
