The cryptocurrency market is experiencing a downturn despite recent interest rate cuts by the Federal Reserve and positive developments in US-China trade negotiations. Bitcoin, along with major altcoins, has seen price declines, reflecting a cautious sentiment among investors.
Bitcoin's Price Decline Bitcoin, the leading cryptocurrency, fell 3.8% to $108,572.57. This drop occurred after Federal Reserve Chair Jerome Powell suggested that the recent 25-basis-point rate cut might be the last one for 2025. This statement unsettled investors who had been anticipating further monetary easing. Despite the recent pullback, Bitcoin still commands over 45% of the total crypto market.
Altcoin Performance The decline wasn't limited to Bitcoin; altcoins also experienced losses. Ethereum fell 3.6% to $3,871.51. XRP dropped 4.1% to $2.51, while Solana slipped 1.3% to $191.95. Dogecoin and Cardano also saw declines, falling 3.1% and 2.1% respectively. BNB remained comparatively resilient, easing only 0.68% to $1,102.46.
Impact of Federal Reserve's Actions The Federal Reserve's interest rate decisions have a significant impact on the cryptocurrency market. Lower interest rates typically increase liquidity in financial markets, making capital available for riskier investments like cryptocurrencies. However, the crypto market's reaction to the latest rate cut was muted due to Powell's cautious tone regarding future cuts. This uncertainty led to increased volatility and a sell-off in the crypto market.
US-China Trade Negotiations Progress in US-China trade negotiations had initially boosted risk sentiment and fueled a rally across crypto markets. Top negotiators from both countries reached a preliminary consensus on key trade issues, reducing fears of new tariffs. However, the positive impact of these developments was overshadowed by concerns about the Federal Reserve's monetary policy.
Jerome Powell's Remarks Jerome Powell's remarks played a crucial role in the market's downturn. His indication that another interest-rate cut in December "is not a foregone conclusion" intensified the selloff. This uncertainty contributed to market volatility, as both cryptocurrencies and stocks had rallied this year in anticipation of lower interest rates.
Market Liquidations The crypto market experienced a liquidation surge, with over $817 million in leveraged positions wiped out across major exchanges. This occurred as traders reacted to the Fed's cautious comments on future rate cuts, triggering massive leveraged liquidations. About 165,000 traders faced forced liquidations across major exchanges.
Institutional Investor Activity Despite the market's weakness, institutional buying remained strong. Spot Bitcoin ETFs saw $202.48 million in net inflows on October 28, bringing total cumulative inflows to $62.34 billion. Ethereum ETFs also rebounded, recording $246.02 million in inflows on the same day. These inflows signal steady institutional confidence despite short-term volatility.
Analyst Perspectives Analysts suggest that the crypto market's reaction to the Fed's rate cut and US-China trade negotiations is a short-term phenomenon. Some analysts believe that Bitcoin may rebound if it holds above its key $110,000 support. However, a retest of $108,000 remains possible if selling pressure continues.
Overall Market Sentiment The crypto market's current downturn reflects a combination of factors, including uncertainty about future interest rate cuts and cautious sentiment following US-China trade negotiations. While the long-term outlook for the crypto market remains positive, investors are advised to remain cautious and prepare for potential volatility.
