The sharp fluctuation in the global cryptocurrency market in the last 24 hours has seriously weakened investors’ risk appetite. While the total market value decreased by 3 percent to 3.1 trillion dollars, Bitcoin 
$86,989.86 It was withdrawn from $ 94,000 to $ 89,975 during the day. Ethereum 
$2,804.64 While it lost 3.4 percent of its value to $3,123, XRP lost 4 percent to $2. The further aggravation of losses in mid-cap tokens has made the outlook for the market significantly negative. Uniswap fell by 7 percent, Polkadot by 8 percent and Ethena by 10 percent. Although the Fear and Greed Index remains at 29, this figure cannot hide the uneasiness in the market.
Fed’s “Hawk, Not Dove” Discount Shook the Market
The main reason for the fluctuation in the market is the Fed’s 25 basis point interest rate cut, which took place on December 10 and has been priced in for a long time. Although the market gave an 89 percent probability of a discount, the expected relief did not come after the decision. Because Fed President Jerome Powell pointed out that inflation is still above the target and gave a message of limited relaxation in monetary policy. So, the discount came, but it was not presented to the market in a sufficiently “dovish” tone.
With Powell’s cautious statements, the US 10-year bond rate rose to 4.25. This increase tightened financial conditions and increased pressure for highly leveraged positions in the crypto market. According to CoinGlass data, a position worth $519 million was liquidated in the last 24 hours. $370 million of this came from long positions. The fact that the open interest rate decreased by 1.7 percent to 131 billion dollars shows that investors are turning to risk reduction.
Japan Influence and Global Pressure
As if the uncertainty on the US side was not enough, interest signals from Japan also shook the market. The fact that the Japanese 2-year bond interest rate exceeded 1 percent for the first time in 10 years made carry trade positions, especially those created with yen funding, risky. Unwinding these positions reduced leverage globally, making crypto prices even more fragile.
Analysts especially state that Bitcoin may find the first strong support zone in the $88,000–$84,000 range. Standard Chartered announced that the Fed’s “hawkish reduction” decision led them to revise their year-end price targets downwards. Nic Puckrin, co-founder of Coin Bureau, says that uncertainty in the market reduces the possibility of a strong rally in December. According to him, a short-term recovery can only be possible with more stable funding conditions and a clearer signal of demand from the spot market.
On the other hand, the latest macro signals of the European Central Bank also reinforce the cautious atmosphere in the crypto market. Higher-than-expected core inflation data in the Eurozone makes it difficult for the ECB to cut interest rates in the near term. This situation, just like the Fed process, weakens investors’ desire to turn to risky assets and supports downward pressure on the crypto market.
