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.
