Major virtual assets, including BTC, have been showing extreme volatility, causing the market to fluctuate. The announcement of the Federal Reserve's (Fed) interest rate policy and the remarks of Chairman Jerome Powell have influenced investor sentiment, leading to a significant drop in the prices of major assets.
As of 8 am on the 19th, according to the global virtual asset status tracking site 'CoinMarketCap', BTC is trading at $10,577 (about 14.605 million won), down 5.25% from the previous day. This is about 7% lower than the all-time high of $10,830 recorded the previous day. ETH also fell 5.9% to trade at $3,641, and XRP plummeted 8.7% to $2.33. In addition, major altcoins such as Solana and Dogecoin also showed a decline of more than 7-9%.
The background of this decline is the Fed's interest rate policy. The Fed adjusted the benchmark interest rate down by 0.25 percentage points to 4.25-4.5% through the Federal Open Market Committee (FOMC) on the 18th (local time). However, the market's expectations were not met as the forecast for additional interest rate hikes next year was reduced to 2 times, less than the previous expectation. Chairman Powell said, "We will be more cautious about the pace of interest rate adjustments," and "If inflation does not reach the target of 2%, we may review the policy."
In particular, Powell's remarks on BTC greatly shook the virtual asset market. He drew a line, saying that "the issue of the former President-elect Trump's review of the cryptocurrency strategic reserve fund is a matter for Congress to decide, and the Fed has no plans to get involved." Powell also reiterated that "the Fed cannot own BTC," clearly distancing the central bank from cryptocurrencies.
Prior to these remarks, BTC had recorded a sharp rise due to the former President-elect Trump's remarks. Trump said in an interview with CNBC on the 12th that "while other countries, including China, are actively accepting cryptocurrencies, the US can also seize strategic opportunities through cryptocurrencies," raising market expectations. However, with Powell's negative stance, the virtual asset market cooled down and investor sentiment was dampened.
Experts view this sharp drop as a short-term profit-taking sell-off, with the virtual asset market entering a correction phase. David Lawant, director of research at Falconx, analyzed that "the Fed's cautious interest rate policy is burdening risky assets, and internal market factors are likely to have a greater impact than policy factors in the next few months."
The decline of major altcoins such as ETH and XRP also reflects the instability of the virtual asset market. As the virtual asset market has been sensitive to changes in interest rate policy, this adjustment is analyzed as a complex result of reduced expectations for interest rate cuts and deteriorating investment sentiment.
