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The announcement of a 25 bps Fed rate cut has proved to be a sell-the-news event for Bitcoin and the broader crypto market. Jerome Powell’s rate cut announcement has provided an exit liquidity for investors.
BTC price is down 2.5% taking support at $90,000, with the overall market liquidations soaring past $500 million.
Fed Rate Cut Announcement Turns Sour for Bitcoin, Crypto Market
Within hours of the US Federal Reserve announcing rate cuts, Bitcoin retreated to roughly $90,000. The 4% pullback from its intraday high came as “smart money” exited.
On the other hand, retail players served as exit liquidity amid dumping by big players. Blockchain analytics firm Santiment reported:
For the third consecutive FOMC meeting, U.S. interest rates have been cut by 25 basis points. Initially, retail enjoyed some nice gains from the news. But as always, when euphoria hit, the FOMO burned many.
Popular market analyst Ardi cited a strong divergence in the wallet behaviour of small traders and large holders. He said retail wallets holding $0–$1,000 were aggressively buying.
Mid‑size wallets with $1,000–$100,000 were also being bought. Whale wallets holding $100,000–$10 million were aggressively dumping.
“While retail was celebrating today’s pump, the ‘smart money’ was exiting the building. Over the last week, retail and mid-sized traders have been heavily scaling into positions, chasing the green candles and headlines. Whales have been using retail’s FOMO as exit liquidity. They have offloaded over $1 Billion in exposure in that same period,” said Ardi.
Additionally, the Glassnode report also shares a similar opinion. “Bitcoin remains in a structurally fragile range, pressured by rising unrealised losses, elevated realised loss realisation, and significant profit-taking by long-term holders,” it noted.
Buy The Dip Opportunity In Crypto Market?
Following the major correction last month, Bitcoin and the broader crypto market showed signs of resurgence. Despite this, the BTC price has been facing resistance at $94,000 and has once again seen a pullback.
While some investors see it as a buy-the-dip opportunity, on-chain data tells otherwise. Crypto analyst Ali Martinez said the BTC price hasn’t fallen enough.
He noted that realized losses point to growing market stress. He added that this pattern often signals potential buying opportunities.
Martinez highlighted that past “buy-the-dip” zones have emerged when Bitcoin traders’ realized losses dropped below –37%. At present, the metric sits at –18%, with Martinez suggesting that there’s more scope for the downside.
Crypto analyst Ardi said the crypto market is aggressively unwinding leveraged long positions. He linked this shift to reactions following the latest FOMC meeting.
He noted that traders are reducing risk as liquidity expectations adjust. According to Coinglass data, over $377 million in long liquidations have occurred over the past 24 hours.
Ardi stated that Bitcoin is now “mining for stops,” with dense liquidation clusters extending down toward the $86,000 level. He noted that price action is behaving like a magnet for this leverage.
Bitcoin ETF Inflows Surge After Fed Rate Cut
Following the Fed rate cut, inflows into spot Bitcoin ETFs have surged to $223 million on December 10. However, these inflows remain quite concentrated, with BlackRock iShares Bitcoin Trust (IBIT) alone seeing over $192 million in inflows.
This follows some significant outflows from the Bitcoin fund IBIT over the past two weeks. On December 10, BlackRock’s IBIT swallowed a total of 2,065 BTC amid strong inflows. Trading activity remained elevated, with the product posting $3 billion in daily volume.
