Dogecoin down 11% Bitcoin decline sours festive crypto mood.

Dogecoin drops 11% amid broader crypto losses, with Bitcoin’s decline casting a shadow over festive market sentiment.

• Losses in BTC and other crypto heavyweights continued for the third day.
• Traders at Singapore-based QCP Capital ascribed the market meltdown to unduly strong emotions during the previous month.
• Bitcoin’s dip comes during an otherwise positive era for the market.

Bitcoin (BTC) and other cryptocurrency majors saw losses for the third day in a row due to risk-off behavior following the FOMC meeting and profit-taking.

BTC fell 4.2% in the last 24 hours, while Solana’s SOL, ether (ETH), and Cardano’s ADA fell up to 9%. Dogecoin fell the highest, 11%, bringing weekly losses to more than 21%.

The broadly based CoinDesk 20 (CD20), an indicator of the biggest coins by market capitalization, dropped 5.5%. This spilled over into futures markets, with almost $890 million in long and short liquidations in the previous 24 hours.

On Wednesday and Thursday, all risk assets saw a severe selloff in response to a hawkish FOMC decision. The Nasdaq fell 3.5%, the S&P 500 dropped 2.9%, and BTC fell almost 6% as Fed Chair Jerome Powell hinted at only a few rate cuts in 2025.

Powell subsequently stated at a post-FOMC news conference that the central bank is not permitted to buy bitcoin under existing regulations, in answer to a question concerning President-elect Donald Trump’s strategic reserve claims.

Traders at Singapore-based QCP Capital ascribed the market meltdown to unduly strong emotions during the previous month.

“While it is easy to blame the selloff on the Fed’s hawkish cut, we believe the root cause of the morning’s crash to be market’s overly bullish positioning,” QCP stated in a Telegram speech.

“Since the election, risk assets have had a remarkable one-sided run, making the market particularly sensitive to any shocks. While the Fed’s 25 basis point decrease was expected. The cause of concern was the dot plot, which was revised downward. Due to continuing inflation. The Fed now expects two rate decreases in 2025, compared to the market expectation of three,” QCP noted.

Bitcoin’s dip comes during an otherwise positive era for the market.

December has historically been a positive month for bitcoin, known informally as the “Santa Claus Rally.” Since 2015, bitcoin has concluded December in the green six times, with gains ranging from 8% to 46% (in the outlier year of 2020).

Seasonality is the tendency of assets to endure regular and predictable changes that repeat every calendar year. While it may appear random. Dogecoin probable explanations vary from profit-taking during tax season in April and May. Resulting in drawdowns, to a usually bullish November and December, indicating greater demand ahead of the holiday season.

Read more: Crypto Market Update December 19, 2024, Red Flags