TLDR
- The crypto market experienced over $1.1 billion in liquidations following Federal Reserve Chair Jerome Powell’s comments on monetary policy.
- Bitcoin fell below $107,000 and breached its 200-day exponential moving average after the recent FOMC meeting.
- The Federal Reserve cut interest rates by 25 basis points, but this move created uncertainty about future rate decisions.
- Powell revealed that FOMC members have strongly differing views about a potential December interest rate cut.
- The Federal Reserve announced the end of quantitative tightening, a policy that typically increases liquidity in financial systems.
The crypto market experienced over $1.1 billion in liquidations following Federal Reserve Chair Jerome Powell’s comments on interest rate policy. Bitcoin fell below $107,000 and its 200-day exponential moving average after the recent Federal Open Market Committee meeting. This downturn occurred despite a 25 basis point rate cut and improving US-China trade relations.
Crypto Market Bleeds After Powell Rate Warning
The Federal Reserve cut interest rates by 25 basis points at Wednesday’s FOMC meeting. However, Powell’s statements created uncertainty for the crypto market and investors. He revealed that committee members hold “strongly differing views” about a potential December rate cut.
Powell stated that inflation has eased from its 2022 highs but remains above the 2% target. The Fed chair acknowledged difficulties in balancing maximum employment with stable pricing.
“A further reduction in the policy rate at the December meeting is not a foregone conclusion,” Powell said.
The FOMC announcement triggered widespread liquidations across the crypto market within 24 hours. Bitcoin’s price dropped below a critical technical support level. The 200-day exponential moving average breach raised concerns among crypto market participants.
Quantitative Tightening Ends, Liquidity Concerns Remain
The Federal Reserve announced the end of quantitative tightening at the recent meeting. This policy change typically increases liquidity in financial systems. Higher liquidity generally acts as a positive catalyst for the crypto market.
However, a gap exists between the end of quantitative tightening and the start of quantitative easing. The crypto market may experience further downside pressure during this transition period. Active liquidity injections will not begin immediately after quantitative tightening concludes.
Historical data shows Bitcoin fell 35% in 2019 after the Federal Reserve ended quantitative tightening. Investors fear a similar decline could affect the current crypto market cycle. The precedent has created anxiety among crypto market traders and analysts.
US-China Trade Agreement Provides Limited Relief
US Treasury Secretary Scott Bessent announced the suspension of technology restrictions on Chinese companies on Thursday. China agreed to suspend export controls on rare earth minerals in exchange. These minerals are essential for electronics and military defense applications.
The easing of trade tensions between the two nations typically benefits the crypto market. Several weeks of improving relations preceded Bessent’s announcement. Yet the crypto market still declined despite this positive development.
Trade negotiations have continued between Washington and Beijing throughout recent months. The agreement represents a breakthrough in technology and mineral access disputes. Reuters reported the details of the mutual suspension arrangement.
The crypto market continues to face pressure from monetary policy uncertainty, despite improvements in trade. Bitcoin traded at $107,655 at the time of reporting. Market participants await clarity on the potential interest rate decision for December.
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