Why Bitcoin Tanked

Welcome back, degens!

Bitcoin tanked, altcoins followed, and your portfolio probably took a hit. If you're wondering what happened, you’re not alone—our inbox was flooded with questions. So today, we’re breaking it all down in true DegenDen style.

Let’s dive into why the markets did a backflip off a cliff and why this dip might just be a blessing in disguise.

What Happened? Fed Drama Unleashed

The Federal Reserve delivered the expected 0.25% rate cut, but that wasn’t the full story. Fed Chair Jerome Powell threw a curveball:

• Fewer rate cuts in 2025: The projection dropped from 3 to just 2.

• Inflation target revised up: From 2.1% to 2.5%, signaling inflation is harder to control than they’d like to admit.

The market didn’t take this lightly:

• Bitcoin dropped from $104k to below $93k.

• The S&P 500 went full kamikaze.

• The US dollar got stronger, making crypto (a “risk asset”) less appealing.

Basically, Powell talked, markets panicked, and here we are.

$1.4 Billion Liquidated: The Long Squeeze

Let’s talk liquidations:

• Within 24 hours, $1.4 billion in leveraged long positions evaporated.

• The single biggest liquidation? A $15.8M Ethereum trade on Binance. Ouch.

This wasn’t just Bitcoin—it was an altcoin massacre:

• Dogecoin: Down 27%.

• Ether, Solana, ADA: All took double-digit hits.

Leverage is a double-edged sword, and when the market dips, it gets ugly fast.

Why This Isn’t the End (and Might Be the Beginning)

If this feels eerily familiar, it’s because we’ve seen this before. Dips like this are a natural part of every bull cycle:

1. Price Discovery Corrections: Bitcoin tends to correct after breaking all-time highs, and these dips are usually buying opportunities.

2. Consolidation: Experts are calling for BTC to find support between $85k and $95k before climbing higher.

3. Market Overpositioning: The post-election rally had the market overly bullish—this dip flushes out weaker hands and resets the board.

This is the first major correction of this bull market, and historically, there are up to 4 of these per cycle. Translation? The best might still be ahead.

The Big Picture: Macro Forces Are Still Bullish

Sure, the Fed’s hawkish tone caused a short-term sell-off, but let’s zoom out:

• Inflation: PCE inflation data came in lower than expected, offering a glimmer of hope.

• Liquidity Expansion: Analysts predict that global monetary policies will continue to expand liquidity in 2025, which is great news for Bitcoin.

• Bitcoin’s Growing Role: Despite the dip, Bitcoin is increasingly being viewed as a safe-haven asset, much like gold.

So yes, it’s painful now, but the broader trend still points up.

What Should You Do Now?

1. Zoom Out: This is one dip in a long-term uptrend.

2. Avoid Panic Selling: Don’t be the guy who sells the bottom and watches Bitcoin bounce.

3. Educate Yourself: Learn why these corrections happen—weak hands sell, strong hands buy.

Closing Thoughts: Strong Hands Win

Bitcoin’s dip below $100k wasn’t the apocalypse—it was a test. For those of us who’ve been here before, this is just part of the ride. For the newbies: welcome to crypto, where volatility isn’t a bug—it’s a feature.

And remember: every bull market is built on the backs of corrections.

Until next time, stay sharp, stay informed, and stay Degen.

The DegenDen Team

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_{Disclaimer: This newsletter is for informational purposes only and does not constitute financial advice. Crypto is volatile—always DYOR and consult with a financial advisor before making investment decisions.}