The crypto market experienced a sharp decline as Bitcoin fell below $103,200, triggering widespread sell-offs and liquidations. Uncertainty surrounding the Federal Reserve's interest rate decision, coupled with broader economic conditions and bearish technical trends, contributed to the overall downturn.

The cryptocurrency market suffered a notable decline on 18 December, with total market capitalisation dropping roughly 3% to $3.65 trillion. This decline comes after Bitcoin reversed course from its recent all-time high above $108,000, falling to an intraday low of $103,173. The drop has sparked worry and confusion among investors as to the underlying causes of the sell-off. Bitcoin's decline set off a domino effect, leading to widespread selling across the crypto market. Ethereum also reported further losses over two days, while other significant cryptocurrencies such as Dogecoin, Cardano, and Tron experienced notable dips as well. The market downturn was further amplified by substantial liquidations in the derivatives space, with over $419 million in positions wiped out, including $53 million in Bitcoin long positions alone. The overleveraging on bullish sentiment contributed to this cascading effect, as profit-taking and risk-off behaviour became the dominant themes. Concerns regarding the Federal Reserve's upcoming interest rate decision added to the jittery sentiment. Scheduled for the final Fed meeting of 2024, a potential 0.25% rate cut spurred caution in the financial markets. The sell-off mirrored declines in US equities, as indexes like the S&P 500, Nasdaq, and Dow Jones all posted losses. Broader economic conditions, such as rising inflation and a weakening labour market, also fuelled market apprehension, as investors reassessed risk in anticipation of the Fed's guidance for 2025. Technical analysis pointed to a bearish divergence in the total crypto market cap, with rising prices contradicting a falling relative strength index (RSI). Such mismatch often suggests a weakening trend or impending correction, as appeared to be confirmed when buyer exhaustion and profit-taking emerged. If the sell-off persists, the entire crypto market could slide further towards $3.50 trillion, a key support level. On the other hand, renewed confidence might propel the market to test its recent highs around $3.73 trillion. Traders and investors are advised to remain cautious amid these turbulent conditions, given the uncertain outlook. While opportunities may exist for a rebound, risks remain prevalent. This scenario underscores the importance of thorough market analysis and prudent risk management strategies during periods of heightened volatility.