BTC has lost value over the past three days, falling to $95,000, while other leading cryptocurrencies are also showing significant declines. BTC has depreciated by 4.2% over the past 24 hours, while Dogecoin has been the leader of the decline, falling 11% to $0.298. Some altcoins lost more than 20% over the week. Such high volatility makes investors cautious and avoid risky assets.

Reasons for excessive optimism and hard sell-off

The overall CoinDesk 20 index recorded a 5.5% decline. In the futures markets, more than $890 million in positions were liquidated over the past 24 hours, underscoring the devastating effects of excessive optimism.

Singapore company QCP Capital stated that the main factor of the market's sharp fall was excessively “bullish” moods of participants. QCP experts note:

“The main reason for the morning collapse was overconfidence of investors”.

After the FOMC meeting the head of the Federal Reserve System (FRS) Jerome Powell made it clear that only limited rate cuts are planned in 2025. In addition, he reminded that the Fed cannot own Bitcoin due to current regulations. These statements intensified the market sell-off and prompted investors to exit risky assets.

Seasonal trends and the future of Bitcoin

Traditionally, Bitcoin shows positive dynamics in December: over the past eight years, it has ended the month six times with growth, increasing in value from 8% to 46%. However, current market conditions complicate the realization of such forecasts.

Experts point out that seasonal trends can be caused by tax periods and increased demand during the holiday season. But at the moment, high investor wariness and reduced liquidity in the market are putting pressure even on these familiar cycles.

Conclusion 

The current decline in BTC and other cryptocurrencies is the result of two key factors: negative signals after the FOMC meeting and unwarranted optimism in the market. In this environment, investors are advised to remain cautious and consider risks when planning investments.