The crypto sector's valuation fell by 4% on Wednesday, towards $3.8 trillion. Bitcoin price fell 2% and stabilized around $104,600, while top altcoins such as XRP, AVAX, and SOL suffered losses of over 5% on the day. The news-selling frenzy comes as the Fed expects to cut interest rates less in 2025.
Altcoin market updates: Solana, XRP AVAX ranked among top losers, Fed sparks news selling frenzy
Cryptocurrency traders opted to book profits after US central bank governors on Wednesday predicted that interest rate cuts would be narrower in 2025.
This effectively ends a week-long bull run that saw Bitcoin (BTC), Ripple (XRP), and Avalanche (AVAX) all post double-digit gains since December 10th.
Virtual currency market performance | December 18, 2024 |Source: Coin Gecko
Global cryptocurrency market capitalization fell by 4.2% on Wednesday, according to data compiled by Coingecko. This reflected a decline across the sector after the Federal Reserve cut its key policy rate by 25 basis points, but expects the cuts to be smaller next year.
After the official announcement of the RLUSD stablecoin on December 17th, the XRP price fell by 5.2% and fell below the $2.50 level as market excitement reached its peak. Solana (SOL) price also fell by 5% and found support near the $215 level. Avalanche traders also booked profits on Wednesday, triggering a 5.6% price retracement before settling at the $47 level.
Chart of the day: Bitcoin traders maintain positive outlook despite Fed jitters
When the US Federal Reserve opened on Tuesday, the market was pricing in a 25 basis point (bp) rate cut, and that's what happened. Widespread anxiety surrounding this major market event had already caused the global crypto sector's valuation to shed 4.2% in the past 24 hours. However, market data shows that the majority of speculative traders still maintain an optimistic outlook on Bitcoin's near-term price outlook.
While the Bitcoin price has fallen below $105,000, the Coinglass chart below shows that speculative traders continue to drive capital into the BTC futures market.
Bitcoin (BTC) Open Interest vs. Price |Source: Coinglass
As shown in the chart above, Bitcoin open interest rose to an all-time high of $68.1 billion on Wednesday, reflecting $5 billion in inflows in the past 48 hours. .
If open interest continues to increase as prices decline, it indicates resilient bullish sentiment among short-term speculative traders. This move could set the stage for a rapid breakout in the coming trading sessions for two main reasons.
First, rising open interest amid a price correction suggests that traders are accumulating leveraged long positions in anticipation of a rebound rather than exiting the market. This reinforces the phenomenon of “buying on the edge” that often precedes a sharp recovery.
If Bitcoin sustains its position above the $100,000 psychological support, a breakout toward the $110,000 resistance becomes increasingly likely.
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Latest crypto news:
Ohio Lawmakers Propose State-Backed Bitcoin Reserve to Protect Public Funds
Ohio Representative Derek Melin has introduced the Ohio Bitcoin Reserve Act, a bill aimed at establishing a state-backed Bitcoin reserve.
The bill would allow Ohio to invest excess funds in Bitcoin as a hedge against the devaluation of the U.S. dollar.
Mr. Melin emphasized the importance of Bitcoin in preserving the value of public funds, stating that Bitcoin is a strong complement to traditional investment portfolios amid inflationary pressures.
The proposal reflects growing state-level interest in Bitcoin, with Texas and Pennsylvania also pursuing similar initiatives.
It also reflects broader Republican efforts, including President-elect Donald Trump's anticipated push for a national Bitcoin reserve and Sen. Cynthia Lummis' bill advocating for the purchase of 1 million Bitcoins over five years. It also matches the strategy.
Bitcoin has grown an impressive 155% this year, spurring a 50% post-election surge, further increasing its appeal as a strategic asset.
Arthur Hayes Predicts Massive Cryptocurrency Drop During President Trump's Inauguration
Arthur Hayes, former CEO of BitMEX and CIO of Maelstrom, has warned that the cryptocurrency market will decline significantly around President Donald Trump's inauguration on January 20, 2025.
Hayes said this potential economic downturn is due to a growing disconnect between investor expectations for pro-crypto policies under the Trump administration and the slow pace of political reality. That's what I think.
Bitcoin soared following President Trump's election victory, fueled by optimism over favorable regulations, but Hayes expects a sharp market correction as traders readjust their outlook. are.
Hayes believes that the inauguration will be a turning point in investor sentiment, as President Trump has limited time to implement sweeping crypto reforms.
He disclosed plans to reduce Maelstrom's crypto holdings ahead of the event to reduce risk.
Hayes' prediction cautions against the bullish traders who fueled Bitcoin's post-election rally and emphasizes the importance of balancing speculative enthusiasm with a realistic policy schedule.
President Trump-backed World Liberty Financial adopts sUSDe stablecoin to expand DeFi
World Liberty Financial (WLFI), the Donald Trump-backed crypto platform, is integrating Ethena’s sUSDe stablecoin as a core collateral asset within its DeFi ecosystem.
The move is pending governance approval and will enable sUSDe deposits with dual rewards of sUSDe and WLFI’s native WLF token.
These incentives are intended to increase liquidity and attract new users to WLFI's upcoming Aave v3 instances.
If the government rejects this proposal, WLFI and Ethena plan to pursue alternative cooperation opportunities for mutual integration.
As part of its growth strategy, WLFI has also expanded its digital asset portfolio, investing $500,000 in Ethena and $250,000 in Ondo Finance.
According to Arkham Intelligence, the platform currently has $83 million in total holdings, with Ethereum (ETH) holding the largest share at $57 million.
