Losses in Bitcoin (BTC) and other major cryptocurrencies extended for a third day, as risk aversion and general profit taking following this week’s FOMC meeting added to intense market sentiment.

While BTC decreased by 4.2% in the last 24 hours, Solana’s SOL, ether (ETH) and Cardano’s ADA values ​​decreased by 9%. Dogecoin suffered the biggest loss, dropping 11%, pushing its weekly losses to over 21%.

The broad-based CoinDesk 20 (CD20), an index of the largest tokens by market cap, fell 5.5%. This situation was also reflected in the futures markets, with more than $890 million in long and short liquidations occurring in the last 24 hours.

A hawkish reaction to the FOMC meeting led to a sharp selloff in all risk assets on Wednesday and Thursday. Nasdaq lost 3.5%, S&P 500 lost 2.9%, while BTC fell more than 6% after the meeting; At the meeting, Fed Chairman Jerome Powell hinted that there would be only a few interest rate cuts in 2025.

At his post-FOMC press conference, Powell noted that the central bank cannot own bitcoin under current regulations — in his response to a question about President-elect Donald Trump’s strategic reserve promises.

Traders at Singapore-based QCP Capital attributed the market crash to excessive optimism in the past month.

QCP used the following statements in its Telegram broadcast: “While it is easy to attribute the sales to the Fed’s hawkish interest rate cut decision, the real reason for the morning’s collapse is that the market is positioned in an overly optimistic way.”

“Since the election, risk assets have experienced a one-sided rise and the market has become extremely sensitive to any shock. The Fed’s 25 basis point rate cut was expected, but the source of panic can be attributed to the dot chart being revised lower. Due to the stated inflation that continues “The Fed now forecasts only two rate cuts for 2025, instead of three,” QCP added.

Bitcoin’s decline comes amid a positive period for all other assets.

December is a historically bullish period for bitcoin, referred to as the “Santa Claus Rally”. According to data from the last eight years, bitcoin has closed December in the green six times since 2015, rising at least 8% and at most 46% (the exceptional year in 2020).

Seasonality is the tendency for assets to experience regular and predictable changes throughout each calendar year. While this may seem random, possible causes include factors such as profit realizations around tax season in April and May, and rising demand towards the holiday season, typically due to increased demand in December.