Bitcoin (BTC) $94,806.6 and other leading cryptocurrencies have been declining for three days due to the risk aversion behavior in the markets after the FOMC meeting. While Bitcoin lost 4.2% in value in the last 24 hours, Dogecoin 
$0.29452 It recorded the steepest decline with 11%. On a weekly basis, losses in some altcoins exceeded 20%. This volatility prompts investors to be cautious.
Reasons for Excessive Optimism and Hard Selling in the Market
The broad-based CoinDesk 20 index fell 5.5%. More than $890 million has been liquidated in the futures market in the last 24 hours. This situation revealed the destructive effects of excessive optimism in the markets.
Singapore-based QCP Capital stated that the sharp declines witnessed in the market were due to the recent excessive bullish positioning. QCP Capital traders said, “The main reason for the market’s collapse in the morning is that investors took an overly optimistic attitude.”
Statements by Fed Chairman Jerome Powell at the FOMC meeting put pressure on risky assets. Powell emphasized that only a limited number of interest rate cuts will be made until 2025. He also stated that the central bank cannot own Bitcoin due to current regulations. These statements triggered sharp sales in the markets.
Seasonal Trends and the Future of Bitcoin
Historically, Bitcoin tends to have a positive performance in December. Over the last eight years, Bitcoin has closed in the green six times and gained between 8% and 46%. However, current market conditions make optimistic predictions about these seasonal fluctuations difficult.
Experts point out that seasonal trends in the markets may be affected by tax periods and holiday season demands. However, in the current situation, risk aversion and the contraction in market liquidity also suppress these trends.
As a result, the declines in Bitcoin and cryptocurrency markets occurred as a result of both the negative signals from the FOMC meeting and the atmosphere of extreme optimism in the markets. In this environment, investors are advised to be cautious against market fluctuations.
Disclaimer: The information contained in this article does not constitute investment advice. Investors should be aware that cryptocurrencies carry high volatility and therefore risk, and should carry out their transactions in line with their own research.
