The Fed's Decision To Cut Interest Rates Makes The Crypto Market Collapse

The crypto asset market weakened after the decision to cut interest rates from the Fed. (Photo; Doc. Bitcoinist)

JAKARTA - The reduction in interest rates by 25 basis points by the Federal Reserve (The Fed) recently had an impact on various economic sectors. Not only the stock market and S&P500 collapsed, but the crypto market has also slumped. This policy was taken to reduce global economic pressure but actually had a negative impact on a number of asset markets.

Investors, who were previously optimistic about market stability, now have to face new uncertainties that make the price of Bitcoin and other major altcoins plummet. The Fed's decision made Bitcoin (BTC) lose its position above the psychological price of 100,000 US dollars (approximately Rp1.6 billion).

According to data from CoinMarketCap on Wednesday, December 19, the price of Bitcoin is down 4%. Now trading at the level of 100,880 US dollars (around Rp1.61 billion), with daily lows at 98,874 US dollars (approximately Rp1.58 billion) and the highest at 105,389 US dollars (approximately Rp1.69 billion). Bitcoin's market capitalization also shrank to 2 trillion US dollars (approximately Rp32 thousand trillion), while trading volume jumped to 100 billion US dollars (approximately Rp1,600 trillion).

Not only Bitcoin, crypto asset number two was also affected, Ethereum (ETH) weakened 6% to USD 3,652 (around IDR 58.4 million). Its daily price range is between USD 3,543 (around IDR 56.7 million) and USD 3,902 (around IDR 62.4 million). Ether's market capitalization is in the range of USD 440 billion (around IDR 7,040 trillion), with daily trading volumes reaching 52 billion US dollars (around IDR 832 trillion).

Then the XRP crypto asset, which had occupied the third position as the largest cryptocurrency by market cap, also declined and even recorded a deeper decline, reaching 10%. This condition dragged XRP to fourth based on the market cap.

Although the totap value of the crypto market has fallen, trading activity has actually increased significantly. The overall volume of crypto market trading rose 40%, reaching 251 billion US dollars (around Rp4,016 trillion), although the total capitalization fell 5% to US$3.44 trillion (around Rp55 thousand trillion). The Fear and Greed index is still at 69, indicating that investor interest is still quite high.

A report from SoSo Value shows that there is an outflow of funds worth 84 million US dollars (around Rp1.34 trillion) from the Bitcoin ETF. Grayscale recorded the largest outflow of US$35 million (around Rp560 billion), followed by Invesco with US$25 million (around Rp400 billion).

This situation shows how global monetary policy has a direct impact on the digital asset market and other assets. Experts predict that the next crypto market movement will depend heavily on the Fed's policies and project developments in the blockchain sector.