Today, the cryptocurrency market is experiencing a significant decline. The main reasons for this crash include:
Decisions of the Federal Reserve System (Fed) of the United States:
On December 18, 2024, the Federal Reserve lowered the key interest rate by 25 basis points to a range of 4.25–4.5%. Although a rate cut is usually perceived positively, statements by Fed Chairman Jerome Powell regarding a possible slowdown in further rate cuts in 2025 raised concerns among investors.
Statements by Jerome Powell on Bitcoin:
Powell noted that the Federal Reserve has no right to own bitcoins and is not seeking to change legislation to include cryptocurrencies in its reserves. This statement weakened hopes for institutional acceptance of Bitcoin and led to a decrease in its price.
Investor reaction:
Following Powell's statements, American Bitcoin ETFs recorded a record outflow of capital, which intensified pressure on the market. Additionally, cryptocurrency exchanges liquidated long positions of traders, reinforcing the downward price movement.
As a result of these factors, the exchange rate of Bitcoin fell, which caused a decrease in prices for other cryptocurrencies as well.
To believe or not?
If you see potential in cryptocurrencies and understand the risks, then yes, continue to participate. However, if emotions are taking over and you feel uncertain, it may be wise to take a pause, reassess the situation, and act rationally.
To continue believing is your personal choice, which should be based on knowledge, strategy, and readiness for change.