Crypto markets lurched lower after the Federal Reserve delivered exactly what 
everyone said they wanted: the third straight 25bps cut to close out 2025. 
Santiment’s latest deep dive makes a simple, slightly uncomfortable point: 
retail treated it as a green light, whales treated it as exit liquidity. 
Bitcoin shortly rallied to $94,044, Ether surged to $3,433, XRP hit $2.10 and 
Solana managed to reach $142, but the momentum was short-lived. The BTC price 
fell by more than 5% at one point, ETH even fell by more than 8.5%. What 
Caused The Crypto Market Plunge? On 11 December, the FOMC confirmed another 
quarter-point reduction, completing what Santiment calls the “trifecta of cuts 
at the end of 2025.” Lower rates mean cheaper borrowing, more risk-taking, 
and—on paper—a friendlier backdrop for crypto. The Fed still describes an 
economy growing at a “moderate” pace with inflation above target, and in both 
the October and December meetings it cut because “the balance of risks (like 
slowing job growth) supported easing policy.” Related Reading: Will The Crypto 
Market Benefit From The Trump Fed Takeover? The key shift is liquidity. On 29 
October, the Fed decided to slow the reduction of its securities holdings from 
1 December, easing the pace of balance-sheet runoff. By 10 December, it went 
further, saying bank reserves had fallen “too much” and announcing renewed 
purchases of short-term Treasury bills to keep reserves “ample.” That is a 
move from shrinking the balance sheet to quietly adding money back into the 
system. As Santiment notes, the Fed is still data-dependent but clearly more 
willing to lean dovish to protect financial conditions. Markets, however, 
front-ran the story. Prediction platform Polymarket showed an “overwhelming 
amount of optimism” in the hours before Jerome Powell spoke. At the same time, 
on-chain data flagged abnormal activity: @DeFiTracer spotted a whale selling 
roughly 100 million dollars’ worth of Bitcoin within an hour, triggering “a 
healthy mix of sensationalized panic.” The expected outcome—another 
cut—arrived, but positioning around it was anything but balanced. Bitcoin’s 
price reaction looked bullish at first. BTC spiked to about $94,044 after the 
announcement. Yet Santiment’s social data shows that the positive-versus- 
negative commentary ratio for Bitcoin had already peaked well before Powell’s 
remarks. The crowd’s emotional high came in anticipation; when the actual 
rally hit, traders were “quite modestly reactive” despite the move to 94K. 
Sentiment was spent. Ethereum was worse. Over the same 24-hour window, ETH 
surged to around $3,433, and the positive comment ratio “was a LOT more 
interesting.” Santiment describes “a lot of FOMO after a mini surge 
immediately after Powell spoke,” with many traders who bought the breakout 
“eventually [getting] burned when ETH fell back down to 3,170.” It is the 
textbook “buy the rumor, sell the news” pattern: bullish macro headline, 
short-term bearish price action, retail buying the spike while larger holders 
“gladly” offload into the mini-rally. Related Reading: Crypto Market Structure 
Talks: Senator Lummis Addresses Latest Legislation Plans Structurally, though, 
the report is not outright bearish. Year-to-date, Santiment notes, Bitcoin is 
down about 3.6%, versus a 17.6% gain for the S&amp;P 500 and a striking 61.1% for 
gold. “It’s quite the dramatic difference,” the team writes, arguing that “a 
regression to the mean for BTC would be justified.” With three cuts now locked 
in and reserves being topped up via T-bill purchases, the “catch-up” case for 
crypto versus equities and metals “becomes even stronger.” Historically, 
crypto “has reacted later than equities or commodities when macro trends 
shift.” On-chain, so-called smart money appears to be acting as if that 
delayed reaction is coming. Wallets holding 10–10,000 BTC have added 42,565 
Bitcoin since 30 November. What is “still [remaining],” Santiment says, is “a 
notable dump from retail, which would be indicative of the perfect recipe for 
a major bull run.” For now, they expect smaller traders to “run on fumes from 
this positive news of rates getting cut, for at least a couple of days.” The 
bottom line of the report is deliberately sober. The final FOMC decision of 
2025 “reinforces a narrative of gradual easing, improving liquidity, and a 
cautiously supportive environment for risk assets.” After a rough year, 
“ending the year with three consecutive rate cuts from the Fed is a strong 
sign.” If inflation drifts toward target and economic data stays stable, 
Santiment argues, 2026 could finally give digital assets “the breathing room 
they’ve been waiting for.” Just do not confuse that with an invitation to 
chase the first post-Fed spike—because, as this week just reminded everyone, 
that is still where crypto tourists go to get burned. At press time, the total 
crypto market cap was at $3.04 trillion. Featured image created with DALL.E, 
chart from TradingView.com

Crypto Tanks After Fed Cut: Santiment Breaks Down The Trap

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