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The recent interest rate cut by the U.S. Federal Reserve (Fed) and its economic projections shocked the market. Although a 25 basis point rate cut was anticipated, a reduction in the expected number of cuts for 2025 due to persistent inflation caused significant price movements. This led to a general sell-off in risky assets, resulting in substantial daily losses across the markets.
Global Markets and Cryptocurrency Market Faced Severe Impact
Following the Fed’s announcements, the Nasdaq dropped by 3.56%, and the S&P 500 fell by 2.95%. The cryptocurrency market was also affected by this sharp decline. Bitcoin (BTC) 
$106,798 experienced a drop of over 7%, reaching levels around $94,780, while altcoins saw value losses of 20% or more. Throughout the day, hundreds of millions of dollars in long positions were liquidated.
Market experts indicate that the primary reason behind this decline is not solely the Fed’s rate decision but the overly optimistic position of the markets. The rapid and unilateral rise of risky assets after the elections has made the markets susceptible to shocks.
Fed’s Forward-Looking Projections Heighten Concerns
The Fed’s interest rate projections for 2025 fell short of market expectations. Previously anticipating three rate cuts, the market panicked upon seeing projections for only two cuts. The persistent inflation led the Fed to adopt a more cautious stance in its policy decisions, negatively impacting investors’ perceptions of future risks.
As volatility increases in the cryptocurrency market, many investors warn about the market’s instability. Experts emphasize the need for careful strategy formulation during such periods and being prepared for shocks. It is noted that the market requires a new equilibrium level to balance the unilateral movements following the U.S. presidential elections.
