QCP Capital: The fundamental reason for the market's sharp decline is the market's excessive bullish positioning

QCP Capital stated on its official channel that the hawkish FOMC triggered a sharp decline in all risk assets. The Nasdaq plummeted 3.56%, the SP 500 index fell 2.95%, and Bitcoin dropped by 6.13%.

Although the Federal Reserve's 25 basis point rate cut met expectations, the source of panic can be attributed to the downward adjustment of dot plots. Due to persistent inflation, the Fed now expects two rate cuts in 2025, while markets generally expect three cuts. During Asian trading hours, Bitcoin fell to a daily low of $98,800, with several altcoins falling at least 10%. The market liquidated long positions worth $258.6 million.

While it is easy to blame selling on hawkish interest rate cuts by the Federal Reserve, over-bullish positioning was fundamentally responsible for this morning's crash. Since elections took place, risk assets have experienced impressive unilateral increases making them highly susceptible to any shock.