Hey folks, Pedro here.

Remember all that excitement about interest rate cuts? Well, Jerome Powell went full Grinch, and cut our dreams short. 

Ben Weiss wrote about how the Fed’s hawkish tone completely destroyed Santa’s rally.

Bitcoin fell off a cliff, and is now down 8% to $94,100. But Bitcoin doesn’t free fall alone, and dragged its entourage of altcoins as well. 

Ethereum shed 12% to $3,200. XRP is down 10%, Solana tanked 12%, and Dogecoin lost 20%.  

What’s behind the market meltdown?

Two things: Powell’s hawkish stance on further cuts, and President-elect Donald Trump. 

I wrote on Wednesday that Powell delivered a 0.25% rate cut that everyone saw coming, but the real bombshell was when he hinted at fewer cuts in 2025. 

Investors were banking on four cuts next year. 

Traders are also spooked by a potential US government shutdown. The markets are also pricing in the implications after a Republican-led House rejected a Trump-backed temporary funding plan.

Not helping things: More are casting doubt on the possibility of a Bitcoin strategic reserve. Even Bitcoiners say it’s a bad idea. 

The market’s reaction has been swift and brutal. 

But it’s not just cryptocurrencies that have taken a beating. US stocks are posting deep losses. And even Michael Saylor’s MicroStrategy, which has been outpacing Bitcoin’s surging price, plummeted 7%.

That’s great for short sellers, as well as the naysayers who have cast doubt on Saylor’s Bitcoin-only strategy. (Ben Weiss took a stab at finding out what MicroStrategy’s 1,637 employees actually do.)

The big question now is whether this is just a bump in the road or the start of something bigger. 

And as liquidity thins out amid a tussle between bears and bulls over the holidays, expect more volatility.

This Santa rally might have a rocky sleigh ride ahead.

Even Bitcoiners say a US strategic reserve is a bad idea

Bitcoin dropped sharply Wednesday after the US Federal Reserve cut interest rates 0.25%, and Chair Jerome Powell signalled interest rate cuts would slow in 2025.

Sam Altman’s Worldcoin has ‘homework’ to do for GDPR compliance: German data probe

Sam Altman’s eye-scanning crypto project needs to take a second look at its European operations, according to the German data agency that’s investigated World over its data collection practices.

Bitcoin drops to $100,000 as Fed hints at hawkish 2025

Bitcoiners are beginning to call into question the idea of a US Bitcoin Strategic Reserve, as Pedro Solimano reports.

Post of the week

Heather Morgan, the aspiring rapper who helped her husband steal billions in Bitcoin from crypto exchange Bitfinex in 2016, was recently sentenced to 18 months in jail. However, that hasn’t stopped her from shilling personalised messages on Cameo.

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