Bitcoin and the wider crypto market experienced a sell-off as the Federal Reserve announced a 25 basis point cut to its benchmark policy rate and indicated that fewer rate cuts than initially planned could take place in 2025. Following 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 aligns with the bullish price expectations of most traders, Powell’s indication that only two more rate cuts would occur 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 takes into consideration upcoming policy changes by the incoming Trump administration, which is expected to implement tariffs on imported goods, potentially deport millions of undocumented workers, and pursue economic policies that could expand the deficit. In the press conference, Powell emphasized that the recalibration of Fed policy signals that the central bank is prepared to adjust its policy to meet the needs of the US economy.
Regarding shorter-term projections for Bitcoin’s price, 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 zone, and the analyst stated that reclaiming the $100,000 to $101,400 zone via spot bidding would be essential before the daily candlestick close.
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