Bitcoin (BTC) Market Slumps After Hawkish Fed Speech, Triggering a Crash for Altcoins Like XRP

Over the past 24 hours, the crypto market has experienced significant turbulence, with the slump in Bitcoin price triggering a crash for altcoins like XRP.

Bitcoin price dropped sharply on Wednesday, December 18, sparking a sell-off in the altcoin market. XRP price tanked 19% as the market reacted to the latest Federal Reserve statement.

Bitcoin price experienced a steep decline over the last 24 hours, triggering a sell-off in the altcoin market. The sell-off saw XRP price drop sharply.

Bitcoin price dropped as much as 7.2% on Wednesday. After rallying to highs above the $106,500 price point on Binance, BTC crashed to lows around the $98,800 mark.

The sell-off in Bitcoin also saw the market leader lose the key support of the 200-day Simple Moving Average (SMA). At press time, BTC price attempted to recover from the sell-off and was trading at around the $101,300 price point.

Bitcoin price dropped sharply on Wednesday.

As Bitcoin price crashed, the market experienced liquidations of over $800 million, according to data from CoinGlass at the time of writing.

The sell-off in the crypto market on Wednesday came as several analysts linked the decline to Federal Reserve Chair Jerome Powell's speech following the December 2024 Federal Open Market Committee (FOMC) meeting.

While the Fed cut rates by 25 basis points to the 4.25-4.5% range as expected, Powell rattled markets with statements suggesting that the apex bank's fight with inflation was far from over and interest rates were now likely to remain higher for longer.

Powell disclosed that the most recent 25 bps rate cut was a “closer call” as opposed to market expectations heading into the FOMC that it was a certainty.

The Fed now expects to see inflation at 2.5% in 2025, up 0.4% from its initial 2.1% projection in September 2024 and much higher than its 2% target.

As such, the central bank now looks to only cut lending rates by two-quarter points in 2025, down from the initially projected four, all of which could slow the influx of capital to risk markets like crypto.

“It wasn’t today’s 25 bps cut that made markets freak out—it was the realization that inflation might stick around longer, and the Fed’s not quite ready to take its foot off the gas. Sentiment is shifting, and 2025 suddenly looks a lot less rosy,” prominent crypto analyst Ali Martinez explained on X.

Meanwhile, Powell also scuttled hopes that the Donald Trump administration would launch a Bitcoin national reserve. The Fed chair contended that the law did not allow the central bank to hold the digital asset, adding that the bank was not looking to change the law.

Markets Ticking Up

Following the initial knee-jerk reaction, some crypto assets have started paring losses. BTC, for one, is back above the $100,000 price level, trading near the $101,300 price point but still down about 5% from its Wednesday highs.

ETH has also recovered to trade at nearly around the $3,700 price point, while XRP trades close to $2.35.

As the sell-off in Bitcoin price appeared to slow down, several analysts advised investors to remain calm and avoid panic selling.

While 2025 may now look less exciting for risk markets than previously expected, analysts like Ali Martinez maintain that investors should bid their time and not panic sell.