• The crypto market suffers as the Fed’s latest move pulls Bitcoin below $96K.
• Analysts remain hopeful for an altcoin season as Bitcoin dominance wanes. 

In a surprising market shift, Bitcoin [BTC], which recently broke past the $100,000 milestone and hit $108,000 just two days ago, has now plunged below $96,000.

As of the latest update from CoinMarketCap, BTC was trading at $94,581.14 after a drop of 7.24% in the past 24 hours.

This sharp decline followed the Federal Reserve’s decision to reduce interest rates by 25 basis points on 18th December.

What happened to the crypto market?

AMBCrypto took a closer look at Coinglass data to find out that Bitcoin witnessed over $45 million in liquidations. Furthermore, Ethereum [ETH] saw nearly $30 million.

That’s not all, the broader cryptocurrency market faced a staggering $1.25 billion in liquidations over the past 24 hours. This reflected a nearly 10% market downturn.

For those unaware, typically, an interest rate cut is seen as bullish for cryptocurrency. That’s because it signals a more accommodative monetary policy with lower borrowing costs.

Nonetheless, the recent market movement was influenced by the Federal Reserve’s 2025 projections, where Jerome Powell indicated a more cautious approach.

The details of the change in interest rate

Worth noting that the Fed reduced interest rates by 0.25% to 4.25%-4.50%, marking a total decrease of 100 basis points since September. Initially, this supported risk-on assets like crypto through increased liquidity.

However, inflation showed signs of resurgence with a 2.7% year-to-date spike as of November. This prompted the Fed to revise its rate cut trajectory for 2025, now predicting only two rate cuts instead of three.

As expected, the recent wave of liquidations had a profound impact on the financial markets. Nearly $1.5 trillion was erased from the US stock market.

This magnitude of sell-offs has raised concerns of a possible bearish cycle, as volatility spreads and investor sentiment becomes increasingly cautious.

Analysts weighing in

Remarking on the same, one influencer took to X and noted, 

“Hey guys, now that the bull market’s officially over I just wanted to extend a wholehearted thank you to everyone. I’ll be deleting all crypto related socials and logging off.” 

Nevertheless, the prevailing perspective of most analysts seemed to indicate that today’s liquidation is just a short-term flushout.

What should investors expect?

Interestingly, as the crypto market faces widespread bearish pressure, some analysts remain optimistic about an altcoin season.

With increasing liquidations impacting Bitcoin’s dominance, major altcoins like Ethereum and Solana [SOL] are gaining attention. 

Furthermore, the potential influence of political shifts, such as Donald Trump’s upcoming presidency and his selection of Paul Atkins for SEC Chairman, could bring about a more favorable regulatory environment, signaling a bullish momentum for the market.