Bitcoin, Ethereum, XRP, Dogecoin Whipsaw, But These 4 Key Factors Make It A 'Hiccup,' Not A Downturn

Bitcoin’s BTC/USD sell-off on Friday saw prices dip below $93,000, but Bitwise CIO Matt Hougan argues that the current pullback is a “hiccup” rather than a trend reversal.

Hougan sees strong underlying factors including regulatory tailwinds, institutional adoption and Bitcoin purchases by governments as structurally bullish factors for Bitcoin.

Crypto’s Turbulent Friday Trading Session

The cryptocurrency market experienced a volatile session Friday, triggered by the Federal Reserve’s decision to lower its anticipated rate cuts for the coming year.

Bitcoin plummeted from a high of $108,135 to below $92,805, before rebounding slightly, currently trading around $96,950, down 1.2% on the day.

Ethereum ETH/USD also traded down by 1% to $3,430.

This sharp decline mirrored a broader pullback in risk assets, with the S&P 500 dropping 3% and the Russell 2000 Small Cap Index falling 4.4% following the Fed announcement.

The Fed’s move, while expected in terms of a 25 basis point rate cut, surprised markets with its reduced forecast for future cuts. It is now projecting only two in 2025, down from four.

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The Fed Matters For Crypto — But Other Factors Matter More

Potentially higher interest rates traditionally pressure risk assets, and this announcement initiated an initial sell-off across the board, Matt Hougan noted in a social media thread earlier in the day.

However, he emphasized that leverage within the crypto market acted as a significant catalyst for the deeper-than-expected decline.

Hougan maintains that the broader bull market trend remains intact — $1.38 billion of liquidated positions in 24 hours notwithstanding.

He claims the Fed is less impactful to the sector than in previous years, and the industry has gained significant internal momentum due to several fundamental shifts.

He points to several key factors supporting the bullish thesis:

An imminent pro-crypto regulatory shift in Washington, see Trump’s appointment of a ‘crypto czar.’
Increasing institutional involvement and ETF flows, such as record-breaking spot ETF flows.
Bitcoin acquisitions by governments and corporations — even a strategic Bitcoin reserve may be on the table.
Major technological advancements in the programmable blockchain sector (tokenization anyone?).

In a series of tweets, Hougan also highlighted that Bitcoin’s 10-day exponential moving average (approximately $102,000) remains above its 20-day exponential moving average (around $99,000), which is a traditional bullish indicator for him.

This technical measure has historically been a reliable gauge of market trends and suggests the medium term trend for Bitcoin, despite the volatility, is still positive.

What Technical Indicators Are Saying

According to James Toledano, Chief Operating Officer at Unity Wallet, “Profit taking is definitely at play here, with Bitcoin trading volume rising 24% in the last day and Bitcoin ETF outflows hitting a record $672M in 1 day.”

This shows recent price volatility is not solely attributable to external influences, but internal to the market as well.

“Many people who invested earlier in the year will have doubled their money and those who invested years ago, made more than they ever dreamt possible,” he told Benzinga.

Toledano also noted that whilst Bitcoin trading volume is skewed towards selling, altcoins have been subject to significant trading activity.

Ethereum trading volume is up 45% over 24 hours, with 70% of that buying activity.

XRP XRP/USD, currently up 1% on the day and recovering from a 20% drop earlier in the day, is seeing a similar volume pattern.

BNB BNB/USD is also up 1.3% at $670.

However, Dogecoin DOGE/USD is down 1% and Shiba Inu SHIB/USD down about 5% , hile SUI SUI/USD is up 7% at press time.

While reduced liquidity in the upcoming holiday period could lead to increased volatility, Toledano added, the absence of major institutional activity may stabilize prices.

He also pointed out that, based on historic trends, there is no clear pattern at this time of the year.

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