Bitcoin (BTC) and other cryptocurrency majors fell for a third straight day as market sentiment ran high on risk aversion and general profit-taking following this week's FOMC meeting.

BTC has fallen 4.2 percent in the last 24 hours, with Solana's SOL, Ether (ETH) and Cardano's ADA down as much as 9 percent. Dogecoin fell, falling 11 percent, extending losses for the week to more than 21 percent.

The composite index CoinDesk 20 (CD20), a token index with the largest market cap, fell 5.5%. This spilled over into the futures market, with more than $890 million in long and short liquidations in the past 24 hours.

On Wednesday and Thursday, the reaction to the hawkish FOMC triggered a sharp sell-off in all risk assets. Since the meeting, the Nasdaq has plunged 3.5 percent, the S&P 500 is down 2.9 percent, Bitcoin is down more than 6 percent, and Federal Reserve Chairman Jerome Powell has hinted at only a few rate cuts in 2025.

Later, in response to a question about President-elect Donald Trump's strategic reserve pledge at a press conference following the FOMC meeting, Powell said that under current regulations, the central bank is not allowed to hold bitcoin.

Traders at QCP Capital in Singapore blamed the market's decline on overly bullish sentiment over the past month.

"While it is easy to blame the sell-off on the Fed's hawkish rate cut policy, we believe the root cause of the morning plunge is the market's overly bullish positioning," QCP said in a Telegram broadcast.

Risk assets have been impressively lopsided since the election, leaving the market highly vulnerable to any shock. While the Fed's 25 basis point rate cut was expected, the source of the panic can be blamed on the dot plot, which was downgraded. Because of persistent inflation, the Fed now expects two rate cuts in 2025, compared with consensus expectations of three.

The decline comes amid a bullish period for Bitcoin.

Historically, December tends to be a bullish month for Bitcoin, colloquially known as the "Santa Claus Rally." Data from the last eight years shows that since 2015, bitcoin has ended December higher six times, gaining at least 8% to reach 46% (2020 is an exception).

Seasonality means that assets experience regular and predictable changes from year to year. While it looks random, possible reasons include profit-taking around the tax season in April and May (leading to declines) and general bullishness in November and December (a sign of increased demand ahead of the holidays).