After the Federal Reserve signaled fewer rate cuts than expected for 2025, the U.S. stock market witnessed a significant drop. In the same speech, Federal Reserve’s chairman, Jerome Powell stated that they have no authority to hold Bitcoins, pushing Bitcoin below $93,000.
However, the popular television personality and host of Mad Money on CNBC, Jim Cramer advised investors, saying “You always had to BUY the fear not sell it”. While he did not mention Bitcoin directly in his Tweet, many experts are linking it with the sharp fall in Bitcoin’s price, which has sparked fear in the crypto community.
I have studied every faux shutdown since the time of Bill Clinton and you always had to BUY the fear not sell it
— Jim Cramer (@jimcramer) December 20, 2024
The recent crypto momentum hit a major setback as the Federal Reserve cut interest rates but projected higher inflation and unemployment for 2025. Bitcoin plunged 6.2% to below $100,000, Ethereum down 9.7% to $3,350 and Dogecoin dropped 16.8% to $0.3032.
Although cryptocurrencies are often promoted as alternatives to traditional finance systems. They trade similarly to growth stocks, reacting negatively to rising interest rates. Despite the Fed’s rate cut, bond yield increased, with the 10-year government bond rising 6 basis points, reflecting inflation concerns. Historically, higher rates have led to lower crypto valuations, as seen in 2022.
The recent crypto rally, fueled by FOMO (fear of missing out) and speculative optimism after the U.S. election, may be nearing its end. Speculation about Bitcoin being adopted as a government reserve asset added to the hype, but Fed Chair Jerome Powell dismissed this possibility.
However, Senator Cynthia Lummis responded to his remark, saying she is ready to give power to the Federal Reserve to create a strategic reserve.
Also Read: US SEC Approves Nasdaq, Cboe BZX Rule Changes for Crypto Index ETFs