Bitcoin turned lower from $104,000 following the announcement, dipping to $99.1K after the Fed Chair’s speech on Thursday, down nearly 5% over the past 24 hours.
The altcoin market performed worse, with XRP, Cardano’s ADA, and Litecoin’s LTC down 10% before recovering from their lows.
Coinglass data showed 278,901 traders were liquidated for the day, with total liquidations amounting to $809 million. The largest single liquidation order happened on Binance – ETHUSDT, valued at $7.1 million.
A less dovish monetary policy in 2025 is bad news for the crypto market. Recent data indicated persistently strong economic growth and sticky inflation, causing the focus to shift today in search of hints regarding the Fed’s future policy decisions, including the policy statement, revised economic forecasts, and the forthcoming press conference with Chairman Jerome Powell.
A sustained increase in the value of the US dollar also presents a macro risk to Bitcoin because it is linked to a reduction in the world’s money supply, which is generally detrimental to Bitcoin and other cryptocurrency assets.
Bitcoin’s greatest risk is a strong dollar and tightening liquidity. However, the hypothesis that the BTC supply deficit is elevated is supported by the fact that on-chain factors for the cryptocurrency are still very positive, especially the continuous decline in exchange balances.
According to the Fed’s quarterly economic projections, which include a “dot plot” showing the central bank’s expectations for the Fed funds rate’s trajectory, policymakers anticipate that the rate will drop to 3 percent by the end of 2025 or by an additional 50 basis points in rate cuts the following year.
Crypto Market Faces Headwinds in Future Despite Trump’s Effect
Arthur Hayes, the co-founder and former CEO of cryptocurrency exchange BitMEX, believes that the current bullish trends in the cryptocurrency market, sparked by Donald Trump’s recent victory in the presidential election, may not last long.
- According to Hayes’ most recent piece, the cryptocurrency market might experience a major decline on January 20, the day Trump takes office as the 47th president of the United States. This is why he anticipates such a high market turnout.
- According to the BitMEX co-founder, numerous U.S. politicians will begin campaigning by the end of 2025, with the mid-term elections in November 2026. This means that Trump might not implement policy changes for a while, as predicted by Hayes.
- Trump’s pledges to safeguard cryptocurrency mining interests, create a Bitcoin reserve, and position America as the global “crypto capital” have caused the price of Bitcoin to more than double this year. Additionally, he has suggested creating crypto regulations that would give the industry what many have long demanded.
When crypto investors realize this around January 20, 2026, the market could encounter a “terrifying sell-off,” as described by Hayes. “Once they realize that Trump has at most one year to implement any policy changes starting from January 20, the market will experience a severe sell-off, affecting crypto and other Trump 2.0 stock investments. Investors are likely to feel the sting of buyer’s remorse.”
