Bitcoin Slips Beneath $96K as CoinDesk 20 Plummets 10% Following Fed-Induced Market Jolt; SOL Reverses Post-Election Gains

On Thursday, digital asset values continued to erode, extending the market-wide downturn that kicked off Wednesday after Federal Reserve Chair Jerome Powell dashed hopes for interest rate cuts in the U.S. next year.

Bitcoin’s Rollercoaster: Failed Surge Above $100K and Sharp Slide

Earlier in the U.S. trading session, Bitcoin (BTC) showed signs of clawing back above the $100,000 threshold, but that momentum quickly fizzled out, dragging prices down into the upper $97,000 range. A brief rebound nudged BTC close to $98,000 before a deeper dive pushed it below $96,000 — marking a 4.8% drop over the past day.

Altcoins Bear the Brunt with Deeper Losses

The altcoin arena experienced even more brutal declines, with the comprehensive CoinDesk 20 Index tumbling over 10% during the same timeframe. Ethereum’s ether (ETH) dropped 10.8%, slipping under the $3,500 mark, while heavyweights like Cardano (ADA), Chainlink (LINK), Aptos (APT), Avalanche (AVAX), and Dogecoin (DOGE) suffered steep falls ranging from 15% to 20%. Particular attention falls on Solana (SOL), which plummeted to its lowest price since November 7, almost erasing the gains it amassed post-election with a 26% nosedive from its all-time peak struck less than a month prior.

Within the last 24 hours — essentially since the Federal Reserve’s recent rate announcement — CoinGlass data reveals approximately $1.2 billion in liquidated leveraged crypto derivative positions. Out of this staggering figure, over $1 billion represented long positions, reflecting bets on rising asset prices.

Snapshot of the Broader Market Reaction

Traditional financial markets offered a mixed picture: U.S. equity indices edged up slightly from Wednesday’s depths but relinquished some of their pre-market gains during trading. Both the S&P 500 and the tech-heavy Nasdaq ended about 0.5% higher compared to the close of the previous day.

Political Winds and Investor Sentiment: The Backdrop to Price Swings

Since Donald Trump’s surprise victory in the November presidential race, crypto prices surged almost vertically, fueled by investor optimism over anticipated pro-crypto policies under his administration. However, Wednesday’s Fed forecast signaling a more cautious approach to interest rate cuts next year, paired with Powell’s hawkish rhetoric on inflation, blindsided many market participants. This sparked a sweeping selloff spanning cryptocurrencies, equities, and even traditional safe havens like gold.

Currency and Bond Market Indicators Signal Turbulence

The U.S. dollar index (DXY), a crucial barometer of greenback strength against a basket of global currencies, rocketed past 108 — its loftiest level since November 2022. Meanwhile, yields on 10-year U.S. Treasury notes surged above 4.6%, hitting their highest point since May.

Market Experts Weigh In on the Correction

Joel Kruger, market strategist at LMAX Group, remarked in a Thursday briefing: “The crypto realm had been perched anxiously, bracing for a pullback after Bitcoin smashed the $100,000 barrier earlier this month. The trigger came from traditional markets, and the ripple effects of Wednesday’s Fed announcement proved unavoidable.”

Azeem Khan, co-founder and COO of the layer-2 protocol Morph, shared via email with CoinDesk: “Viewed through a wider lens, this retracement appears like a natural, healthy correction when seen against the backdrop of year-over-year growth.”

He further noted, “Historically, the tail end of the year often sees selloffs as investors strategically realize losses to offset gains for tax purposes. While it’s tricky to quantify exactly how much this contributes right now, it could be playing a part.”

Key Market Metrics in Brief