The crypto market experienced a significant downturn today, with the global market cap slipping to $3.16 trillion, marking a 3% decline in the last 24 hours. Despite high trading volume at $151 billion, major assets including Bitcoin, Ethereum, XRP, and Solana are all trading in the red. This sell-off began shortly after the US Federal Reserve announced a 25 basis point rate cut, which was the third rate cut of 2025.
Fed Rate Cut Sparks Volatility
Instead of providing a bullish boost, the Federal Reserve's announcement created market doubt. The expected strong bullish reaction did not materialize following the FOMC meeting, which was characterized by a cautious tone. Fed Chairman Jerome Powell indicated that the Fed might pause further rate cuts, and two members, Schmid and Goolsbee, voted against the rate cut, preferring no change. Additionally, the Fed announced plans to begin purchasing $40 billion worth of US Treasury bills starting December 12. These mixed signals eroded market confidence and contributed to the current market decline.
Bitcoin Price Crash After FOMC Meeting: History Repeats Again
The Bitcoin price crash commenced almost immediately after the results of the FOMC meeting were released. The BTC price fell below the $90,000 mark within hours. Volatility intensified, leading to the liquidation of over $250 million worth of levered long positions in just four hours. This pattern is not unprecedented; Bitcoin has experienced a price drop after every major FOMC announcement throughout the year, and this trend continued. Within a single day, Bitcoin slipped another 2.70%, reaching $89,998.63 with a market cap of $1.79 trillion.
Analyst Ali highlighted that Bitcoin's open interest has dropped drastically from $47.5 billion to $27.5 billion over the past two months, nearly halving. This sharp decline suggests that traders are reducing leverage and adopting a more cautious approach, adding further pressure to the ongoing price cycle. As anticipated, Ethereum, XRP, and most altcoins followed Bitcoin's downward trend, deepening the overall negative market sentiment.
Liquidations Surge, Fear Rises: The Core Reason Why Crypto Is Crashing
Liquidation data provides a clearer explanation for the current crypto market downturn. Glassnode reported that 154,228 traders were liquidated in the past 24 hours, resulting in a total loss of $512.53 million. The single largest liquidation was recorded on Hyperliquid, where a BTC-USD position valued at $23.18 million was forcibly closed. Meanwhile, total crypto inflows have fallen to $6.2 billion, the lowest level since April, according to Ali. The Fear and Greed Index remains in the "deep fear" territory at 29, indicating another week of suppressed market sentiment. This combination of aggressive long liquidations, declining inflows, and rising fear has created a perfect storm for a broad market correction.
Will the Market Bounce Back? Signals Suggest a Reversal Later
Despite the widespread panic, several strong indicators suggest that the current downturn may be short-lived. Analyst Ali noted that historically favorable buying opportunities arise when Bitcoin's on-chain realized losses fall below -37%. Currently, this metric stands at -18%, indicating that while deeper dips might occur, the groundwork for a powerful rebound is being laid. Large investors, often referred to as whales, are also actively accumulating assets. Tom Lee's Bitmine purchased 33,504 ETH, valued at $112 million, in just six hours, increasing its total ETH position to 120,094 ETH worth $392.5 million. Similarly, Machi Big Brother has added more USDC on Hyperliquid to expand his 11,100 ETH long position. Such whale activity often signals a potential market reversal.
Conclusion
The crypto market's decline is attributed to the Federal Reserve's cautious communication, significant Bitcoin liquidations, a drop in open interest, and weak inflows. However, accumulating activity from large investors and improving on-chain trends suggest that the current dip could evolve into the next major buying opportunity. For now, the advice remains consistent: remain calm, understand the underlying reasons for the market movement, and hold assets through periods of fear.