Crypto Market Crash: Bitcoin (BTC) Plummets 10%, Ethereum (ETH) Drops 16% Influenced by the Federal Reserve's "Hawkish" Stance

Bitcoin's recent pullback marks the first significant market adjustment since the post-U.S. election euphoria

Bitcoin (CRYPTO: BTC) price dropped sharply on Friday, influenced by the Federal Reserve’s recent 0.25% rate cut and a combination of profit-taking and technical market forces, according to industry experts.

The world’s largest cryptocurrency fell about 10% to a preliminary low of $92,250, as of the last check.

What Happened: Bitcoin’s recent pullback comes amid the central bank’s decision to raise interest rates for the first time since the pandemic lows, with a smaller-than-expected cut and reduced expectations for future rate decreases.

This move has tightened macro liquidity, impacting speculative assets like cryptocurrencies.

Speaking with Benzinga, Forest Bai, Co-founder of Foresight Ventures, said that such market adjustments are typical in bull markets, highlighting that a 20% correction is to be expected.

He added that such a correction offers a consolidation rather than a trend reversal.

Despite the short-term volatility, Bai remains optimistic due to robust institutional inflows and on-chain data showing long-term holders capitalizing on liquidity to realize gains, with $2.1 billion in profits recorded.

The total crypto market cap lost 4.4% to reach $3.36 trillion over the last 24 hours, down over 11% from its all-time peak, according to FxPro’s Kuptsikevich.

Bitcoin is back below $100K, getting support at $96K on Friday morning. A break below $94.5K could signal further bearish trends.

The crypto market has liquidated $1.38 billion in the last day, with a significant $1.21 billion from long positions, indicating a sharp correction, according to CoinGlass.

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According to Raj Kapoor from the Blockchain Governance Council, the recent rate cut, although anticipated, has had a profound effect on speculative assets like cryptocurrencies.

He said that the market crash isn’t merely a tale of plummeting numbers but a series of interconnected forces.

Kapoor pointed to profit-taking and panic selling, which were exacerbated by technical analysis indicating mean reversion and the Wyckopff Method phases.

Despite the downturn, he sees potential recovery signals with Bitcoin’s cup-and-handle pattern, suggesting a future rally to $120,000, though he cautions about the possibility of further declines before a true recovery.

See Benzinga's full coverage of cryptocurrency news at this link.

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