The broader cryptocurrency market faced a significant downturn after the Federal Open Market Committee (FOMC) convened on December 18. The US Federal Reserve's anticipated 25-basis-point rate cut came with fewer projected reductions in 2025 than previously estimated, unsettling markets. Bitcoin's valuation plummeted over 5%, dipping below $100,000, though it showed slight recovery. Across the board, altcoins experienced double-digit percentage losses.

The Federal Reserve's decision aligned with a 25-basis-point decrease but marked a pivotal shift in the future rate trajectory. The central bank now foresees only two cuts in 2025, down from four, reflecting a more guarded approach. This monetary policy shift reverberated through risk assets, prompting a 3% fall in the S&P 500 and a 4.4% decrease in the Russell 2000 Small Cap Index.

In the immediate aftermath within the crypto sector, market reactions were acute. Matt Hougan, Chief Investment Officer at Bitwise Asset Management, commented on social media platform X about the Fed's influence: "The Fed's announcement of a 25-basis-point cut, coupled with reduced expectations for next year, led to a pronounced decline in risk assets."

Hougan observed Bitcoin's heightened sensitivity to monetary shifts, noting how the price decline was intensified by the liquidation of leveraged positions. He remarked, "$600 million in leveraged long positions were liquidated today, deepening the pullback."

Despite the significant correction, Hougan maintained a positive long-term outlook: "Crypto continues to gain internal momentum. Today's developments do not disrupt mega-trends such as Washington's pro-crypto stance, increasing institutional adoption, ETF inflows, Bitcoin acquisitions by governments and corporations, and significant technological advances in the blockchain space."

Technical indicators supported Hougan's optimism: "Bitcoin's 10-day exponential moving average of $102k exceeds the 20-day average at $99k, a positive momentum indicator."

In concluding, Hougan expressed confidence in the enduring crypto bull market, insisting that the Fed's rate cut projections won’t alter the trajectory: "We are in a multi-year bull phase in crypto. Even 50 basis points in rate cuts will not change that."

Several analysts concurred with Hougan's interpretation of the Federal Reserve's strategy. Warren Pies, Founder of 3Fourteen Research, remarked on X that, by increasing inflation forecasts while lowering unemployment expectations, the Fed tacitly opened the door to more than two cuts in 2025 should economic data turn dovish.

Esteemed macro analysts echoed these sentiments. Crypto analyst and podcaster Fejau (@fejau_inc) described the Fed's approach as a play on market psychology: "The Fed, compelled to cut this week, now employs a hawkish 2025 FFR dot plot as a means to temper long bond yields despite today's cuts. Welcome to macro psyop warfare."

Fejau highlighted the psychological intent of the dot plots over their predictive function: "The dot plots should be seen more as a psychological lever than a forecast. The Fed has afforded itself time for further data to emerge before committing to action. Expect 2025's outcomes to diverge from today's forecasts."

Andreas Steno Larsen, CIO of Steno Global Macro Fund and CEO at Steno Research, offered a similar perspective: "By increasing forecasts, the Fed has strategically prepared for more cuts without a firm commitment."

As of press time, Bitcoin traded at $101,768.