The cryptocurrency market experienced a significant downturn following the Federal Reserve’s announcement of a 25 basis point reduction to its benchmark interest rate. The Fed also signaled a more restrained approach to rate cuts in 2025 than previously anticipated, prompting a mixed reaction from investors.
After Fed Chair Jerome Powell’s remarks during the post-announcement press conference, Bitcoin’s price dropped by 4.6%, landing at $101,300. Meanwhile, Ether faced a steeper decline, falling 5.96% to $3,600.
Although traders had widely expected the 0.25% rate cut, which aligns with many bullish outlooks, Powell’s suggestion that only two more rate reductions might occur in 2025 surprised the market. Adding to concerns, the Federal Reserve raised its inflation projection for 2025 from 2.1% to 2.5%, a move seen by some as reflecting a cautious stance.
This updated outlook factors in potential shifts in economic policy under the Trump administration. Plans to impose tariffs on imports, conduct large-scale deportations of undocumented workers, and implement measures that could increase the national deficit are all expected to influence the broader economic landscape.
Powell stressed that the recalibration of monetary policy underscores the Fed’s readiness to adapt to the evolving needs of the U.S. economy.
On the crypto front, market analyst Skew highlighted the broader implications of Bitcoin’s price movement, noting that the recent dip cleared out leveraged positions on both sides, with long positions being liquidated and short traders locking in profits.
Bitcoin’s price has dropped into a critical support range between $100,000 and $98,000. According to Skew, reclaiming the $100,000 to $101,400 zone through spot market buying will be vital for a more favorable daily close.
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