Crypto Market Drops Following Fed Rate Cut, Santiment Analyzes Impact

Crypto markets declined after the Federal Reserve's third consecutive 25bps rate cut at the end of 2025. Retail investors saw this as a positive signal, while larger holders used it as an opportunity to exit.

• Bitcoin briefly reached $94,044 and Ethereum $3,433 before both fell sharply, with BTC dropping over 5% and ETH over 8.5%.
• The market reacted initially with optimism due to cheaper borrowing costs and increased liquidity from the Fed easing its balance sheet reduction.
• However, significant whale activity, including a $100 million Bitcoin sell-off, led to a market pullback.

Santiment notes that structurally, the market is not entirely bearish despite recent losses. Year-to-date, Bitcoin is down 3.6%, contrasting with gains in equities and gold.

• With three rate cuts complete, crypto may catch up to equities and metals as macro conditions shift.
• Wallets holding 10-10,000 BTC have added 42,565 Bitcoins since 30 November, signaling potential for delayed market reaction.

The report concludes that the Fed's actions suggest a supportive environment for risk assets, potentially benefiting digital assets if economic stability continues into 2026.

At present, the total crypto market cap stands at $3.04 trillion.