Federal Reserve Chair Jerome Powell delivered unexpected hawkish remarks on Wednesday that sent Bitcoin tumbling below the $110,000 threshold. Powell stated during his post-policy meeting press conference that a December rate cut was far from guaranteed, catching traders off guard.
Federal Reserve Policy and Market Reaction
Markets had priced in a 90% probability of another rate reduction at the Fed's final meeting of 2025. The central bank cut its benchmark rate by 25 basis points to a range between 3.75% and 4.0%, as widely anticipated. However, Powell's cautionary tone overshadowed the decision.
Bitcoin dropped approximately $2,000 to $109,600 following the comments, marking a 5% decline over 24 hours. Ethereum also faced pressure, trading around $3,890 with a 2.7% loss during the same period. The largest cryptocurrency by market capitalization has fallen more than 10% from its peak after dipping below $105,000 earlier this month.
Broader Market Impact
Traditional markets mirrored the crypto sell-off. Stocks reversed from modest gains to losses, while the 10-year Treasury yield jumped 8 basis points to 4.06%. The dollar strengthened as December rate cut odds plummeted from 90% to 69%, according to CME FedWatch data.
Dissenting Views on Rate Decisions
The vote on the rate decision was not unanimous. Kansas City Fed chief Jeffrey Schmid voted to maintain rates unchanged, while White House appointee Stephen Miran pushed for a larger 0.50% reduction. Recent economic indicators have shown mixed signals, with unemployment hovering around 4.3%, a four-year high reported by the Chicago Fed in September.
Factors Complicating Fed Decision-Making
Marcin Kazmierczak, co-founder of oracle network RedStone, noted the ongoing government shutdown creates a data blackout that complicates Fed decision-making. "This uncertainty likely means bitcoin and broader crypto volatility through year-end," he explained. The shutdown prevents policymakers from accessing crucial economic data needed for rate decisions.
Analyst Outlook on Bitcoin's Range and Accumulation
Paul Howard, director at crypto trading firm Wincent, observed that Bitcoin continues attempting to hold the $110,000 to $120,000 range. He suggested the current dip could present accumulation opportunities before anticipated macro improvements heading into November.
Long-Term Outlook for Bitcoin
Gerry O'Shea, head of global market insights at crypto asset manager Hashdex, maintained that despite near-term volatility, strong investor demand for exchange-traded funds and improved U.S. regulatory conditions support the possibility of Bitcoin surpassing its previous all-time high later this year. Inflation remains above the Fed's 2% annual target, with the Consumer Price Index rising 3% in the 12 months through September.