Why Cryptocurrencies Are Crashing: Bitcoin is Taking a Hit: Why the Cryptocurrency Market Is Having a Tough Week

Bitcoin Prices fell sharply, dragging down the entire cryptocurrency sector following a hawkish Fed forecast for 2025. Bitcoin fell 6.2% in the past 24 hours, falling below $100,000, while Ethereum and Dogecoin saw steeper declines. By 9.7% and 16.8%. %, respectively. The broader market downturn comes on the heels of concerns about rising inflation and unemployment, leaving investors wary of risky assets such as cryptocurrencies.

At first glance, the Fed’s decision to cut interest rates may appear favorable. However, the accompanying warning about higher-than-expected inflation and unemployment has destabilized the market. Thus bond yields rose, with 10-year government bonds increasing by 6 basis points in one day and 64 basis points over the past year.

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This is bad news for cryptocurrencies, which often behave like traditional risk assets. Historically, higher interest rates have pushed down valuations for growth stocks and cryptocurrencies alike, mirroring the trends seen in 2022.

The current crypto rally, which began in the wake of election speculation about crypto-friendly policies, is likely to lose steam. The initial rally was driven by fear of missing out (FOMO), with speculative narratives such as Bitcoin becoming a reserve currency. However, Fed Chairman Jerome Powell made it clear that the Fed cannot buy Bitcoin.

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FAQ:

What role does MicroStrategy play in the cryptocurrency market?
MicroStrategy is a big buyer of Bitcoin. The decline in its stock and strategy has contributed to the broader cryptocurrency decline.

What factors could affect cryptocurrency prices in 2025?
Possible factors include economic conditions, new regulations and speculative momentum in the market.