Bitcoin and the wider crypto market experienced a sell-off following the Federal Reserve’s announcement of a 25 basis point reduction to its benchmark policy rate, along with indications that fewer rate cuts than initially planned may occur in 2025.
After Fed Chair Jerome Powell’s post-rate cut press conference, Bitcoin (BTC) price fell by 4.6% to $101,300, while Ether (ETH) dropped by 5.96% to $3,600. Despite market participants anticipating a 0.25% rate cut, which aligned with the bullish price expectations of most traders, Powell’s suggestion that only two additional rate cuts would happen in 2025 raised concerns. Compounding what some traders interpreted 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 reflects anticipated policy changes from the incoming Trump administration, which is expected to implement tariffs on imported goods, potentially mass deport millions of undocumented workers, and introduce economic policies that could increase the deficit. During the press conference, Powell stressed that the recalibration of Fed policy signals the central bank’s readiness to adjust its approach to meet the needs of the U.S. economy.
Regarding short-term projections for Bitcoin prices, crypto analyst Skew indicated that the decline in BTC had 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
Bitcoin’s price fell into a block of bids in the $100,000 to $98,000 range, and the analyst noted that reclaiming the $100,000 to $101,400 zone through spot bidding would be crucial before the daily candlestick close.
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