The US stock market recently experienced a significant downturn, shedding over $1.5 trillion in value in a single day, with the repercussions felt across the crypto market as well. This dramatic decline can be attributed to a confluence of factors, including the Federal Reserve’s monetary policy decisions and geopolitical tensions, notably Israel’s airstrikes on Iran-backed factions in Yemen. In this article, we delve into these events and explore their impact on what is colloquially known as Satoshi Street.
Crypto Bloodbath: A Brutal 24 Hours
In the past day, the cryptocurrency market has faced a severe downturn, leading to a massive sell-off that erased $588 million in positions. Among the hardest hit was XRP, which suffered $69 million in liquidations. After reaching a peak price of $2.82, its highest since 2017, XRP fell to $2.56. Bitcoin wasn’t spared either, with $60 million in liquidations as its price dipped below the $96,000 mark. Ethereum also felt the pressure, losing nearly $58 million.
What’s Behind the Drop?
According to a recent report from Santiment, trader anxiety has been intensified by the Federal Reserve’s recent interest rate reductions. While the rate cuts themselves were not the primary concern, the anticipation of fewer cuts in 2025 than previously expected has unsettled both crypto and stock traders. This uncertainty, compounded by a market shift from “Extreme Greed” to “Fear,” has fueled the sell-off. Altcoins have been particularly vulnerable, with assets like Avalanche, Chainlink, Litecoin, and Pepe all experiencing declines of approximately 16% in the past day. XRP has dropped 6.74%, currently trading at $2.35, while Solana has seen a 9.79% decrease over the past week, now valued at $208.49.
A Few Winners Amid the Chaos
Despite the widespread losses, not all cryptocurrencies are on a downward trajectory. Ethena (ENA) has seen a rise of 11.66%, trading at $1.18, buoyed by new utility features. Similarly, Movement (MOVE) has recorded a strong gain of 11.48%, now priced at $0.7171, driven by robust community engagement.
More Bloodbath in January?
Looking ahead, Arthur Hayes, the former CEO of BitMEX, has issued a stern warning about a potential major sell-off in the crypto market around January 20, 2025, coinciding with Donald Trump’s inauguration. Hayes suggests that the market may not experience a swift recovery following Trump’s assumption of office, as potential delays in regulatory policies due to political disputes could trigger further sell-offs. However, some analysts view this downturn as a buying opportunity, anticipating that 2025 will be a significant year for Bitcoin, despite potential major drops before it reaches another all-time high. Additionally, rumors of a new ETF launching next year could aid in the market’s recovery from these losses.
