Why is the Crypto Market Down Today After the FOMC Decision?

The crypto market is down today, December 11, a day after the Federal Reserve delivered its third interest rate cut of the year. Bitcoin and other altcoins were in the red.

These cryptos mirrored the performance of the stock market, where futures tied to the Dow Jones, S&P 500, and Nasdaq 100 dropped by over 0.50%. So, why is crypto market down today?

Crypto is Down Today as Investors Sell the News

A key concept in the financial market is known as buying the rumor and selling the news. This is a situation where investors buy assets ahead of a major news event and then sell when the news happens.

In this case, Bitcoin and most altcoins were rising a few days before the Federal Reserve interest rate decision. The Bitcoin price traded near the important resistance level of $95,000 the day before.

Therefore, investors are merely selling Bitcoin and other altcoins since the news event has already happened. They are now looking forward to the next catalyst.

The Fed Dot Plot Pointed to Just One Rate Cut in 2026

The crypto market is declining as market participants react to the closely watched dot plot, a document that predicts the pace of rate cuts.

This dot plot showed that Fed officials are predicting just one rate cut in 2026, which will bring the benchmark rate to between 3.25% and 3.5%. They also expect the bank to cut interest rates one more time in 2027.

Economists and crypto experts were expecting the Fed to deliver more rate cuts than that. It explains the disappointment among crypto traders.

Most importantly, there are signs that FOMC members are starting to become more independent than they were a few months ago. Three officials dissented with Powell, with Stephen Miran voting for a 50 basis points rate cut and Jeff Schmid and Austan Goolsbee voting for the status quo.

The implication of all this is that the next Fed Chair may struggle to find the votes he needs to cut interest rates more aggressively, as Donald Trump has suggested.

Oracle Earnings and the AI Risk

Another external factor contributing to the decline in the crypto market today is Oracle. Oracle, a company that has transitioned from a database firm into a major player in the artificial intelligence industry, has published its quarterly financial results.

The numbers showed that its cloud revenue rose by 34% to $7.68 billion, while its infrastructure business gained 68% to $4.08 billion. Most importantly, Oracle’s Remaining performance obligations (RPO) rose to $523 billion.

However, investors are concerned about the rising costs and whether it will translate the growth into profits. As a result, Oracle’s stock dropped by over 10%, dragging other companies in the industry, such as Nvidia, Meta, and Microsoft.

The crypto market is going down because of the correlation with the stock market. In most cases, cryptocurrencies drop when stocks are falling.

Crypto Market Going Down as Liquidations Rise

Activity in the futures market shows that liquidations rose over the last 24 hours as exchanges closed leveraged bullish trades. Over 146,700 traders were liquidated in the last 24 hours, with the dollar amount hitting $492 million.

Most of this liquidation affected Bitcoin’s long positions, with $166 million being wiped out. Ethereum positions worth $161 million were also wiped out, resulting in additional selling pressure.

At the same time, the futures open interest dropped by 0.35% over the last 24 hours to $133 million. This suggests that investors are reducing their leverage in the crypto industry.

Summary

The cryptocurrency market is going down today following the Federal Reserve’s interest rate decision and the latest Oracle earnings. However, on the positive side, there is a likelihood that the ongoing crash is a knee-jerk reaction that may push investors to buy the dip.