Bitcoin and Altcoins See Significant Drop Following Fed Decision and Trump’s Remarks
Cryptocurrency markets experienced a notable downturn on Thursday, with Bitcoin and several altcoins such as Avalanche, Dogecoin, and IOTA seeing significant losses. Bitcoin (BTC) fell from a recent high of $87,500 earlier this week, landing at $84,000, while Ethereum (ETH) dropped to $1,965. Other cryptocurrencies, including Dogecoin (DOGE) and IOTA (IOTA), also faced declines of more than 4%. The overall market capitalization of all cryptocurrencies decreased by 1.5%, bringing it down to approximately $2.74 trillion.
Impact of Political Statements
This decline in cryptocurrency values comes on the heels of a statement made by former President Donald Trump during a pre-recorded video address for Blockworks’ Digital Asset Summit in New York City. Trump expressed support for the cryptocurrency sector, suggesting that the expansion of digital assets would bolster the dominance of the U.S. dollar. He noted a significant departure from the previous administration’s regulatory stance, emphasizing his intentions to end what he referred to as the “regulatory war on Crypto and Bitcoin.”
In his speech, Trump reassured attendees that he would halt strategies such as the controversial “Operation Choke Point 2.0,” which he characterized as government-driven lawfare against the crypto sector. Despite these encouraging words, the markets did not respond positively, as Trump provided no tangible policy initiatives or specific regulatory changes that his administration would implement. Speculation had been circulating that he might propose eliminating taxes on cryptocurrency trades, but those hopes did not materialize during his address.
Ongoing Developments in the Crypto Space
While Trump’s pro-crypto remarks were anticipated to galvanize the market, investors may have been influenced by the absence of defined measures. His administration has taken significant steps in the past, including the establishment of a Strategic Bitcoin Reserve comprising seized coins, and an executive order to create a crypto stockpile featuring U.S.-origin cryptocurrencies like Cardano (ADA) and Ripple (XRP).
In a critical move for the cryptocurrency landscape, the U.S. Securities and Exchange Commission (SEC) has concluded a longstanding legal battle against Ripple Labs, announcing the end of that lawsuit and similar legal actions against companies such as Kraken and Coinbase. This decision marks a notable shift in regulatory tones, potentially paving the way for more supportive policies in the sector.
Market Reaction Following the Federal Reserve Decision
The recent volatility in the cryptocurrency market also correlates with reactions to Wednesday’s Federal Reserve decision. Initially, the markets experienced a surge, but this momentum quickly faded as concerns emerged regarding the timing of potential interest rate cuts by the central bank. The Nasdaq 100 and S&P 500 indices reflected this uncertainty, each dropping about 0.25% following the Fed’s announcement.
Adding another layer of complexity to the situation, market participants are keeping a close eye on the upcoming triple witching event, when options contracts worth over $4.5 trillion will expire. This quarterly occurrence is known to prompt increased volatility in both stock and cryptocurrency markets and may also contribute to the selling pressure seen in recent trading sessions.
As the crypto landscape evolves amidst political and economic shifts, investors remain cautious, navigating a market marked by both opportunity and unpredictability.
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