Crypto markets stumble as year-end sentiment sours

After weeks of rising prices, the crypto market has taken a sudden downturn. Bitcoin, the most well-known cryptocurrency, dropped from its peak of $108,000 to $96,000. The overall market sentiment, measured by the Fear and Greed Index, has also shifted, falling to a score of 62.

This drop came after the US Federal Reserve announced a change to its 2025 plans. Instead of four interest rate cuts, the Fed now plans to make only two. Interest rate decisions like these can impact cryptocurrencies because they influence how much money flows into riskier investments like crypto.

Adding to this, Federal Reserve Chairman Jerome Powell commented on the Fed’s stance on Bitcoin, stating, “We’re not allowed to own Bitcoin. The Federal Reserve Act says what we can own, and we’re not looking for a law change.”

These developments have shaken the market. Bitcoin dropped sharply, and even popular coins like DOGE fell by as much as 12.4%.

Some of the decline can also be explained by how markets behave naturally. According to the Wyckoff Method—a theory that describes how prices move through different stages—this drop could be part of a phase called “markdown.” This means that after weeks of strong buying activity, sellers are starting to take over, causing prices to fall.

This sharp dip highlights how unpredictable and risky cryptocurrencies can be. Prices can rise quickly but are just as likely to fall just as sharply.

Currently, the Fear and Greed Index—a tool used to measure how confident or worried investors feel—is at 62, suggesting that confidence is starting to fade.

Despite the downturn, some experts believe this is only a temporary correction. They see it as a chance for investors to reassess and prepare for what might come next.

The road ahead is uncertain. While some predict Bitcoin will soar again in 2025, only time will tell. For now, it’s important for investors to do their own research (DYOR) and manage their risks carefully.