Over $1B Liquidated as Crypto Market Continues to Dip Following Fed’s Hawkish Signal
2024-12-20
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The crypto market faced a major shake-up as over $1 billion in leveraged positions were liquidated within 24 hours on December 19.
According to data from , the bulk of these liquidations, roughly $856.66 million, were from long positions, signaling that bullish traders were caught off guard by the sudden price dip.
Bitcoin, which had maintained strong momentum over the past 30 days, slipped below the critical $100,000 psychological mark after the Federal Reserve signaled a more hawkish stance.Bitcoin Drops to Local Low of $93,000
On December 5, Bitcoin’s price plummeted 5.47% below $93,000, wiping out $300 million in leveraged positions within minutes.
A larger liquidation event occurred on December 10, when over $1.7 billion in crypto positions were wiped out in just 24 hours.
As of now, Bitcoin is trading at around $97,000, down by more than 4% over the past day, according to CoinMarketCap.
Crypto veteran and Bitcoin maximalist Fred Krueger weighed in on the situation, posting on X that “the only way to screw up trading Bitcoin is through leverage,” highlighting the risks associated with high-leverage bets in a volatile market.
Bitcoin is the best trade you will probably ever see.There is exactly one way to screw it up.Leverage.— Fred Krueger (@dotkrueger) 
Despite the turmoil, some analysts remain optimistic. Crypto market analyst Caleb Franzen framed the recent dip as standard behavior during a bull market.
He pointed out that during the previous bull run, Bitcoin experienced nine notable pullbacks, each of which was followed by a new all-time high.
These are all of the Bitcoin pullbacks (not incl. the COVID crash) from the last bull cycle, all of which were followed by higher highs.Down -18.9%, -15.9%, -21.2%, -16.8%, -31.1%, -25.6%, -18.3%, -58.6%, -30.1%, -25.1%.All within the span of 16 months.Buckle up buttercup. — Caleb Franzen (@CalebFranzen) 
Meanwhile, Real Vision’s chief crypto analyst Jamie Coutts suggested that the downturn could present a buying opportunity, while other analysts are still holding out hope for a potential “Santa rally” — a seasonal surge in asset prices typically seen at year-end.
Investor sentiment may also be influenced by speculation surrounding the upcoming inauguration of Donald Trump as the 47th president of the United States on January 20, 2025.
Market watchers are closely monitoring how Trump’s administration might handle crypto regulation, especially with discussions of a potential U.S. Bitcoin strategic reserve.Fed Signals Hawkish Stance
On December 18, the Federal Reserve lowered its key interest rate by a quarter percentage point, the third consecutive reduction.
While the news is good for risk assets like Bitcoin, the central bank came with a cautionary tone about additional cuts in coming years, which adversely impacted the crypto market. 
In delivering the 25 basis point cut, the Fed indicated that it probably would only lower twice more in 2025.
“Cryptocurrencies are still too volatile to serve as an effective hedge against traditional currencies in developed economies,” Ruslan Lienkha, Chief of Markets at swiss-based fintech platform YouHodler, said following the latest rate cut announcement.
“However, they are increasingly viewed as a long-term hedge against inflation. In this context, faster rate cuts by the Fed would inject more liquidity into the financial system, potentially boosting cryptocurrency prices and global interest in the market including Europe.”