Bitcoin and the wider crypto market experienced a sell-off following the Federal Reserve’s announcement of a 25 basis point rate cut to its benchmark policy rate, along with indications that fewer rate cuts than initially planned could occur in 2025.
After Fed Chair Jerome Powell’s post-rate cut press conference, the price of Bitcoin (BTC) dropped 4.6% to $101,300, while Ether (ETH) fell 5.96% to $3,600. Although market participants had anticipated a 0.25% rate cut, which aligned with the bullish price expectations of most traders, Powell’s indication that only two more rate cuts would take place in 2025 raised concerns. Compounding what some traders perceive as a hawkish outlook, the Fed committee also increased their 2025 inflation forecast from 2.1% to 2.5%.
BREAKING: The S&P 500 falls sharply after the Fed cuts rates by 25 basis points, but raises inflation forecast.
The Fed reduced their outlook from 3 to 2 rate cuts in 2025 and raised inflation expectations from 2.1% to 2.5%.
Inflation is back. pic.twitter.com/kKtEHD0IF0— The Kobeissi Letter (@KobeissiLetter) December 18, 2024
This slight shift in perspective essentially considers the upcoming policy changes under the incoming Trump administration, which is expected to implement tariffs on imported goods, potentially mass deport millions of undocumented workers, and adopt economic policies that could expand the deficit. In the press conference, Powell emphasized that the recalibration of Fed policy signals the central bank’s readiness to adjust its policy in response to the needs of the U.S. economy.
Regarding Bitcoin price short-term projections, crypto analyst Skew noted that the drop in BTC cleared “positioning” in “both ways,” as long positions were stopped out and “shorts closing in profit.”
Buyer fully filled now
not seeing the same passive buying on other spot exchanges
Binance spot for one remains pretty heavy
Bid liquidity remains around $100K – $98K https://t.co/MzhetiJtbC— Skew Δ (@52kskew) December 18, 2024
The price of Bitcoin fell into a block of bids in the $100,000 to $98,000 range. The analyst stated that reclaiming the $100,000 to $101,400 zone through spot bidding would be crucial before the daily candlestick close.
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