Bitcoin (BTC) Losses Extend to Third Straight Day as Risk-Off Behavior Persists

BTC dropped 4.2% in the past 24 hours, with Solana's SOL, ether (ETH) and Cardano's ADA falling as much as 9%. Dogecoin slid the most with an 11% drop

Bitcoin (BTC) price slid further into the red on Friday morning as losses in the broader crypto market extended to a third day amid a broader risk-off mood following this week’s Federal Open Market Committee (FOMC) meeting.

BTC dropped 4.2% in the past 24 hours to trade at $22,260 at press time. The world’s largest cryptocurrency had more than halved gains made earlier in the week, when BTC price rose to highs of nearly $24,300 on Wednesday.

Solana’s SOL fell 9% to extend weekly losses to 17%, while ether (ETH) dropped 6% and Cardano’s ADA fell 7%. Among the top 20 gainers, dogecoin slid the most with an 11% drop, taking weekly losses to over 21%.

The CoinDesk 20 (CD20) index, which tracks the 20 largest cryptocurrencies by market capitalization, fell 5.5% in the past 24 hours.

The broad-based losses in the crypto market spread over to futures markets, with over $890 million in long and short liquidations in the past 24 hours. Of the total, more than $700 million belonged to short liquidations.

Reactions to a hawkish FOMC sparked a sharp selloff across all risk assets, including cryptocurrencies, on Wednesday and Thursday.

The Nasdaq Composite Index dropped 3.5%, while the S&P 500 fell 2.9%. BTC price declined more than 6% since the meeting, where Fed Chair Jerome Powell hinted at only a few rate cuts in 2025.

Powell then said at a post-FOMC press conference that the central bank was not permitted to own bitcoin under current regulations – in response to a question about President-elect Donald Trump’s strategic reserve promises.

Traders at Singapore-based QCP Capital attributed the market crash to overly bullish sentiment in the past month.

“While it is easy to blame the selloff on the Fed’s hawkish cut, we believe the root cause of the morning’s crash to be market’s overly bullish positioning,” QCP said in a Telegram broadcast.

“Since the election, risk assets have enjoyed an impressive one-sided run, leaving the market extremely vulnerable to any shocks. While the Fed's 25bps cut was expected, the source of panic can be attributed to the dot plot, which was revised lower. Due to persistent inflation, the Fed now projects two rate cuts for 2025 compared to the market’s consensus of 3 rate cuts,” QCP added.

The latest drop in bitcoin comes amid an otherwise bullish period for the asset.

December tends to be historically bullish for bitcoin in a move colloquially termed the “Santa Claus Rally.” Data from the past eight years shows that bitcoin ended December in the green six times since 2015, running at least 8% to as much as 46% (in the outlier year of 2020).

Seasonality is the tendency of assets to experience regular and predictable changes that recur every calendar year. While it may look random, possible reasons range from profit-taking around tax season in April and May, which causes drawdowns, to the generally bullish November and December, a sign of increased demand ahead of holiday season.