Bitcoin and the broader cryptocurrency market sold off after the Federal Reserve cut interest rates by 25 basis points and signaled there may be fewer rate cuts in 2025 than initially planned.
Following Federal Reserve Chairman Jerome Powell’s press conference after the interest rate cut, the price of Bitcoin (BTC) fell 4.6% to $101,300, while Ethereum (ETH) fell 5.96% to $3,600.
Market participants had expected a 0.25% rate cut, which would check the box for most traders with optimistic price expectations, but Powell’s indication that there would only be two rate cuts in 2025 raised eyebrows. . In addition to what some traders see as a hawkish outlook, the Federal Reserve also raised its 2025 inflation forecast to 2.5% from 2.1%.
BREAKING NEWS: S&P 500 plunges after Fed cuts interest rates by 25 basis points and raises inflation outlook.
The Federal Reserve lowered its forecast for interest rate cuts in 2025 from three to two and raised inflation expectations from 2.1% to 2.5%.
Inflation is back. pic.twitter.com/kKtEHD0IF0
— Kobeissi Letter (@KobeissiLetter) December 18, 2024
The slight shift in perspective essentially takes into account upcoming policy changes from the incoming Trump administration, including tariffs on imports, the potential mass deportation of millions of undocumented workers, and economic policies that could widen the deficit.
At the press conference, Chairman Powell emphasized that the Fed’s policy realignment is a sign that the central bank is ready to adjust its policies to the needs of the U.S. economy.
relevant: Bitfinex said Bitcoin could reach $200,000 by mid-2025 as price declines are “likely to remain modest.”
When it comes to Bitcoin price near-term predictions, cryptocurrency analyst Skew said the ‘positioning’ in ‘two directions’ has disappeared as BTC declines have halted buying and ‘closed short profits’.
Now it’s full of buyers.
You won’t see the same passive buying on other spot exchanges
Single-person Binance Spot is still pretty heavy.
Bidding liquidity remains approximately $100K – $98K https://t.co/MzhetiJtbC
— Skew Δ(@52kskew) December 18, 2024
Bitcoin price has fallen into a bid block in the $100,000-$98,000 area, with analysts saying it is essential for spot bids to reclaim the $100,000-$101,400 area before the daily candlestick closes.
This article does not contain investment advice or recommendations. All investment and trading activities involve risk and readers should conduct their own research when making any decisions.