Bitcoin (BTC) Dips Below $98K, Ethereum’s ETH, Cardano’s ADA, Dogecoin Tumbled Over 10% in Crypto Correction

Crypto asset prices slid on Thursday, building on Wednesday’s market-wide selloff spurred by Federal Reserve Chair Jerome Powell disappointing investors with his comments on U.S. interest rate cut expectations for next year.

Bitcoin’s (BTC) attempt to bounce back above $100,000 quickly faded earlier during the day and slid to the low-$97,000s during the U.S. day. Recently, it modestly recovered to around $98,000, but was still down 4.8% over the past 24 hours.

Altcoins fared much worse, with the broad-market CoinDesk 20 Index diving more than 10% during the same period. Ethereum’s ether (ETH) dipped 10.8% to below $3,500, while Cardano’s ADA, Chainlink’s LINK, Aptos’ APT, Avalanche’s AVAX and Dogecoin’s DOGE all suffered 15%-20% losses. Notably, SOL sank to its weakest price since Nov. 7 — nearly erasing its post-election rally following a 26% plunge from its record high hit less than a month ago.

Over the past 24 hours — roughly since yesterday’s rate decision by Fed policy makers — nearly $1.2 billion worth of leveraged crypto derivatives trading positions have been liquidated across all assets, CoinGlass data shows. Over $1 billion of those were long positions, or bets that prices would rise.

In traditional markets, U.S. stock indexes slightly bounced from Wednesday’s lows but gave back part of the pre-market gains during the session. The S&P 500 and the tech-heavy Nasdaq were 0.5% up from the Wednesday close.

Crypto prices rose almost vertically since Donald Trump’s presidential election victory in early November, buoyed by hopes of pro-crypto policies from his incoming administration. Wednesday’s Fed projection of a slower pace of rate cuts for next year and Powell’s hawkish tone on rising inflation expectations caught many investors offside, triggering a broad-market selloff across crypto, equities and even gold.

The U.S. dollar index (DXY), a key strength gauge against a basket of foreign currencies, surged above 108, its strongest level since November 2022, while 10-year U.S. Treasury yields also rose sharply above 4.6%, the highest since May.

“The crypto market has already been on pins and needles around the possibility for a correction following the record run in the price of bitcoin through $100,000,” Joel Kruger, market strategist at LMAX Group, said in a Thursday note. “We got that catalyst from the world of traditional markets. … Fallout from Wednesday’s Fed decision was simply too much to ignore.”

“When you zoom out and consider the year-over-year growth, a pullback like this feels healthy,” Azeem Khan, co-founder and COO of layer-2 network Morph, said in an email shared with CoinDesk.

“It’s also worth noting that, historically, year-end selloffs in securities can occur as investors offset losses against gains to lower their tax liabilities,” Khan added. “While it’s hard to say how much of this is driving the current trend, it could be a contributing factor.”