Bitcoin dropped from $104,000 after the announcement to $99.1K following the Fed Chair’s address on Thursday, an almost 5% decrease in the last day.
The altcoin market did worse, with Litecoin’s LTC, Cardano’s ADA, and XRP all dropping 10% before rising above their lows.
According to Coinglass data, a total of $809 million was liquidated, with 278,901 dealers being liquidated for the day. Binance’s ETHUSDT has the greatest single liquidation order, totalling $7.1 million.
For the cryptocurrency market, a less dovish monetary policy in 2025 is terrible news.
The emphasis today shifted to look for clues about the Fed’s future policy decisions, including the policy statement, updated economic forecasts, and the upcoming press conference with Chairman Jerome Powell, after recent data showed persistently strong economic growth and sticky inflation.
Because it is associated with a decrease in the global money supply, which is generally bad for Bitcoin and other digital assets, a prolonged rise in the value of the US dollar also poses a macro risk to Bitcoin.
The biggest threat to Bitcoin is a strong currency and declining liquidity.
However, the fact that on-chain variables for the cryptocurrency are still quite positive, particularly the ongoing drop in exchange balances, supports the premise that the BTC supply imbalance is elevated.
Policymakers expect the Fed funds rate to fall to 3 percent by the end of 2025 or by an additional 50 basis points in rate cuts the following year, according to the Fed’s quarterly economic projections, which include a “dot plot” illustrating the central bank’s expectations for the rate’s trajectory.
Future Challenges for the Crypto Market Despite Trump’s Impact
The present bullish tendencies in the cryptocurrency market, which were triggered by Donald Trump’s recent victory in the presidential election, may not persist long, according to Arthur Hayes, co-founder and former CEO of BitMEX, a cryptocurrency exchange.
- The Bitcoin market may see a significant drop on January 20, the day Trump becomes the 47th president of the United States, according to Hayes’ most recent article. He expects such a large market attendance because of this.
- With the midterm elections in November 2026, the BitMEX co-founder predicts that many U.S. lawmakers would start campaigning by the end of 2025. This suggests that, as Hayes had warned, Trump may not make any adjustments to his policies for some time.
- The price of Bitcoin has more than doubled this year as a result of Trump’s promises to protect cryptocurrency mining interests, establish a Bitcoin reserve, and establish America as the world’s “crypto capital.” He has also advocated for the development of crypto rules that would provide the sector with what many have long sought.
Around January 20, 2026, cryptocurrency investors may become aware of this, and Hayes predicts a “terrifying sell-off” in the market.
The market will undergo a sharp sell-off once people recognise that Trump has no more than a year to enact any policy changes beginning on January 20.
This will impact investments in cryptocurrency and other Trump 2.0 stocks. Investors will probably be hurt by the buyer’s regret.
