The crypto momentum we've seen all fall and early winter hit a big snag over the past 24 hours after the Federal Reserve cut interest rates. That may sound like a good thing on the surface, but as part of the cuts the Fed also said it expects inflation and unemployment to rise more than expected in 2025. Add it up and investors are selling risk assets today.

Bitcoin (CRYPTO: BTC) is the biggest loser, falling 6.2% in the past 24 hours as of 3 p.m. ET and dropping below the $100,000 level. Ethereum (CRYPTO: ETH) is down 9.7% in that time to $3,350 and Dogecoin (CRYPTO: DOGE) is off 16.8% to $0.3032.

As much as cryptocurrencies have been marketed as a way out from under the traditional financial ecosystem, the crypto market trades a lot like traditional risk assets like growth stocks. In this case, when interest rates rise, growth stocks fall and crypto moves down along with them.

I mentioned that the Fed cut rates yesterday, but the market took the inflation talk as a risk for longer-term bonds, and those yields rose after the announcement. According to Bloomberg, the 10-year government bond rose 6 basis points in the last day and is now up 64 basis points over the past year.

As we saw in 2022, higher rates means lower valuations for cryptocurrencies.

This current run for crypto started after the election when there was an increase in speculation that President-elect Donald Trump would open up a bull run for the crypto market. And that may happen, but the gains seen didn't line up with any fundamental changes in the industry.

Fear of missing out, or FOMO, drove valuations higher and that FOMO may now be coming to an end.

There was also speculation that Bitcoin, in particular, would be bought by the U.S. government as a reserve or could be used as a reserve by other governments. Fed Chair Jerome Powell was clear the Federal Reserve is not allowed to buy Bitcoin, which could have caused some disappointment.

This looks similar to a "buy the rumor, sell the news" moment in investing, where there's disappointment when results or news comes out, even something as obvious as the Fed not buying Bitcoin.

The gains of the last year were largely based on speculation and momentum from items like the approval of exchange-traded funds (ETFs) and the election. But in 2025 there may be fewer of these tailwinds and pricing is driven by the number of new buyers coming into the market, like Bitcoin.

It's also worth noting that MicroStrategy has also fallen and its arbitrage strategy makes less sense without a big premium. It's also the biggest individual buyer of Bitcoin in the market, so its multibillion-dollar purchases have been a driver of the price of Bitcoin. And as Bitcoin goes so does crypto, which means everything is lower today.