Bitcoin and other major altcoins faced a significant downturn today, reversing previous gains amid renewed concerns surrounding the Federal Reserve’s forward guidance. Bitcoin’s price fell below $90,000, indicating a pullback from the uptick seen earlier in the week. Other cryptocurrencies, like XRP, experienced sharp declines as well, with its price decreasing by 3.6% within the last 24 hours, and a total drop of 7.8% over the past week. Solana, Dogecoin, Cardano, and Chainlink also saw their values dip by over 3% in the same timeframe.
The CoinMarketCap 20 Index, which tracks the top cryptocurrencies, marked a 3% drop, and the overall market capitalization for all cryptocurrencies slid by 2.64%, settling at approximately $3.02 trillion.
The decline appears primarily linked to the Federal Reserve’s interest rate decision made on Wednesday, which included plans to cut rates and resume quantitative easing (QE) policies. Under QE, the Fed is set to begin purchasing short-term government bonds at a rate of $40 billion each month, potentially increasing liquidity in the market. However, the Fed’s accompanying dot plot indicated only one interest rate cut projected for 2026, which fell short of analyst expectations.
There is potential for adjustments in the Fed’s dot plot next year, given an impending change in its composition. Donald Trump is reportedly interviewing candidates for the Fed Chair position, with the majority of analysts advocating for Kevin Hassett, who has expressed the necessity for substantial rate reductions.
Earlier in the week, positive sentiment had driven Bitcoin and many altcoins higher as investors anticipated the Fed’s decision. The subsequent sell-off seems to be a classic case of “buy the rumor, sell the news.”
In the altcoin market, the Altcoin Season Index has seen a drastic decline, plummeting to a year-to-date low of 17, compared to a high of over 60 earlier this year. This fall is reflective of a broader decrease in altcoin values, with particular poor performers being DoubleZero, Story, MYX Finance, and others, which have all suffered losses exceeding 62% in the past three months, erasing billions in market value.
Simultaneously, liquidations have surged, contributing to the downward pressure on Bitcoin and other altcoins like Solana and Cardano. Data from CoinGlass revealed that Bitcoin positions worth over $175 million and Ethereum positions worth over $170 million were liquidated in just the last 24 hours. Additionally, Solana positions totaling more than $25 million were affected. Liquidations typically occur on exchanges such as Binance and Bybit when leveraged positions are forced to close to safeguard margins.
In light of these challenges, the futures open interest has seen a near 1% decline within the last day, currently assessed at $132 billion. Despite the current market conditions, there is speculation that altcoins may recover as the recent decline could be perceived as a knee-jerk reaction from investors. Furthermore, interest in altcoin ETFs appears to be gaining traction, with Chainlink and Solana funds reporting increases in assets of $2.5 million and $4.85 million, respectively, over the past few days.
