Crypto Markets Slammed After FOMC Shock: Bitcoin Plunges as Fed’s Split Decision Sparks Global Sell-Off
Why the Crypto Market Plunged After the FOMC Meeting: Rising Volatility and a Possible Rebound Ahead
The global cryptocurrency market is facing renewed turbulence following the latest policy decision from the United States Federal Reserve. Despite expectations of a bullish breakout, the crypto market turned sharply lower just hours after the Federal Open Market Committee (FOMC) announced a 25 basis point rate cut, the third interest rate reduction of 2025.
The move, which typically supports risk assets such as cryptocurrencies, instead triggered widespread uncertainty, sending major digital assets deep into the red. As of this morning, the global crypto market capitalization has slipped to approximately $3.16 trillion, reflecting a 3 percent decline in the past 24 hours. Daily trading volume remains elevated at $151 billion, signaling heightened volatility across the market. Bitcoin, Ethereum, XRP, and Solana are all trading lower as the broader market attempts to digest the unexpected reactions that followed the Fed’s announcement.
This extended analysis explores why the crypto market is falling, how the FOMC decision contributed to the downturn, and whether a potential rebound may be approaching.
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| Source: Xpost |
A Rate Cut With a Cautious Tone: The Primary Spark Behind the Market Sell-Off
While a rate cut is usually interpreted as supportive for financial markets, this particular decision created more uncertainty than optimism. Fed Chairman Jerome Powell delivered a measured message, signaling that the central bank may pause future cuts depending on incoming economic data. His comments suggested that the path to additional easing is neither guaranteed nor immediate.
Complicating the picture, two key members of the committee, Schmid and Goolsbee, voted to hold rates unchanged rather than support another cut. Their dissent highlighted the internal divisions within the Federal Reserve, adding another layer of complexity to market expectations.
Adding to investor confusion, the Fed announced a plan to purchase $40 billion in U.S. Treasury bills beginning December 12. While such buying programs are often associated with liquidity injections, the timing and scale prompted mixed interpretations among analysts, leaving traders unsure whether the central bank is positioning for economic weakness or routine balance sheet management.
The combination of divided votes, cautious messaging, and new liquidity operations triggered a decline in market confidence, particularly within high-risk sectors like cryptocurrencies. This hesitation appears to be the first domino that set off the broader sell-off across digital assets.
Bitcoin Declines After FOMC: A Familiar Pattern Repeated
Bitcoin once again displayed its sensitivity to macroeconomic events, falling below the $90,000 mark soon after the FOMC press conference concluded. In just a matter of hours, the flagship cryptocurrency shed several thousand dollars, marking one of its fastest intraday declines since mid-2025.
This reaction follows a consistent pattern observed throughout the year. Each time the Federal Reserve released major monetary policy updates, Bitcoin responded with heightened volatility and immediate drawdowns. Analysts suggest that algorithmic trading, leveraged positions, and macro-focused trading strategies amplify the impact of these announcements, causing sharp price swings regardless of the long-term trend.
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| Source: CMC |
Within the past day, Bitcoin dropped an additional 2.70 percent, reaching $89,998.63. Its market capitalization now stands at approximately $1.79 trillion. More than $250 million in leveraged long positions were liquidated within four hours, sending shockwaves across the futures and derivatives markets.
Crypto market analyst Ali noted that Bitcoin’s open interest has fallen dramatically over recent months, decreasing from $47.5 billion to $27.5 billion. This near 50 percent reduction reflects a market that is deliberately de-leveraging, with traders adopting a more cautious stance as uncertainty builds. With fewer leveraged positions supporting upward momentum, price fluctuations become more pronounced, magnifying the downside during sudden market moves.
Unsurprisingly, Ethereum, XRP, Solana, and other leading altcoins followed Bitcoin’s decline. The broad-based losses deepened the market’s negative sentiment and contributed to the widespread correction.
High Liquidations and Falling Inflows: The Underlying Mechanics of the Downturn
Liquidation data provides a clearer picture of why the crypto market is crashing today. According to on-chain analytics platform Glassnode, approximately 154,228 traders were liquidated in the past 24 hours, resulting in losses of more than $512.53 million. In a particularly notable event, Hyperliquid recorded the single largest liquidation of the day, with a BTC-USD leveraged position worth $23.18 million forcefully closed.
Crypto inflows have also dropped substantially. Total net inflows now stand at just $6.2 billion, the lowest level recorded since April. This steep decline indicates that new capital entering the crypto market has slowed considerably, making the market more vulnerable to downward pressure.
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| Source: Xpost |
Sentiment indicators reflect a similar atmosphere of caution. The widely followed Fear and Greed Index currently sits at 29, placing the market firmly in fear territory. Historically, readings at this level coincide with periods of elevated anxiety and declining investor confidence.
The combination of aggressive long liquidations, lower inflows, and deteriorating sentiment forms a clear backdrop for the current correction. As leveraged positions unwind, they cause further downward pressure on prices, creating a cascading effect throughout the market.
Is a Rebound Coming? Analysts Point to Early Signals of a Potential Reversal
Despite the prevailing pessimism, several analysts believe the market could be approaching a turning point. Some historical metrics suggest that Bitcoin and major altcoins may soon enter a favorable accumulation phase.
Analyst Ali highlighted that Bitcoin’s on-chain realized losses often跌 deepen significantly before major upside reversals occur. Historically, some of the most profitable entry points have appeared when realized losses fall below negative 37 percent. Currently, this metric sits at negative 18 percent, indicating there may still be room for further dips but also showing early signs that the market is approaching a long-term inflection zone.
Whale behavior also offers important clues. Large investors and institutional traders frequently accumulate assets during periods of fear, using market downturns as opportunities to expand their positions.
One of the most notable recent moves came from Tom Lee’s Bitmine, which acquired 33,504 ETH worth $112 million in just six hours. This purchase increased the firm’s total holdings to 120,094 ETH, valued at approximately $392.5 million. Large-scale acquisitions of this nature typically reflect high confidence in long-term price appreciation.
In another significant development, prominent investor Machi Big Brother added more USDC to his account on Hyperliquid, expanding his long position in Ethereum to 11,100 ETH. Strategic moves by such influential market participants often precede market recoveries, as whales tend to accumulate during major downturns.
If this pattern repeats, the recent weakness may ultimately set the stage for the next major market recovery.
What Comes Next for the Crypto Market?
Market analysts generally agree that the current downturn is driven by a combination of macroeconomic uncertainty, leveraged position liquidations, and declining inflows. But the same analysts also observe that long-term fundamentals remain intact.
With institutional investment continuing to grow, blockchain development accelerating, and favorable regulatory conditions emerging in several regions, the broader outlook for crypto remains constructive. What the market is experiencing now may be a temporary compression phase triggered by a sharp macroeconomic adjustment.
Over the coming weeks, investors will closely monitor Federal Reserve commentary, liquidity trends, and whale accumulation patterns. Any shift in economic indicators, inflation data, or trading flows may influence whether the market stabilizes or continues its downward trajectory.
For everyday investors, the message is straightforward: understanding the underlying drivers of market volatility can help minimize panic-driven decisions. Historically, crypto markets have demonstrated resilience after significant corrections, and a patient, informed approach remains essential.
Conclusion
The sharp decline in the crypto market following the FOMC announcement can be attributed to a combination of cautious Federal Reserve messaging, extensive Bitcoin liquidations, shrinking open interest, and weakened capital inflows. These factors created a chain reaction across digital assets, driving the market lower and intensifying investor anxiety.
However, several indicators point to the possibility of a market reversal. Whale accumulation, long-term on-chain metrics, and cooling leverage suggest that the downturn may ultimately evolve into a strategic buying opportunity. While the near-term outlook remains uncertain, long-term investors may find value in staying calm, monitoring key trends, and maintaining a disciplined strategy.
For now, the crypto market must navigate a period of elevated volatility and fragile sentiment. But history shows that periods of fear often precede major market transformations.
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