Bitcoin Price Drops Below $100,000 Amid Fed’s Cautious Rate Cut
The Bitcoin price declined significantly on Wednesday, briefly dropping below $100,000 as the US Federal Reserve's cautious outlook on interest rate cuts affected crypto investments. At one point, Bitcoin fell to $98,760 before recovering to over $100,000. Other cryptocurrencies, including Ethereum and Dogecoin, also experienced notable declines.
Fed's Cautious Rate Cut Sparks Uncertainty In Markets
The Federal Reserve lowered borrowing costs for the third consecutive time but tempered its forecast for future reductions, indicating more progress is needed on inflation before further easing can be considered. Market analyst Tony Sycamore noted that the Fed's decision was anticipated given recent trends in US inflation and economic activity.
This decision prompted a reduction of some speculative excess in risk assets, including stocks and Bitcoin, particularly following the recent US elections. Despite this dip, Bitcoin remains up about 50% since the November 5 elections, driven by President-elect Donald Trump's commitment to deregulating the cryptocurrency sector and proposing a national Bitcoin stockpile.
Paul Veradittakit from Pantera Capital expressed optimism about Bitcoin's future, stating signs indicate a stable outlook despite some traders taking profits post-Fed meeting. Following this meeting, Sean McNulty from Arbelos Markets reported increased demand for options to hedge against potential Bitcoin declines, while Zann Kwan at Revo Digital Family Office suggested a temporary retreat into the low $90,000s for Bitcoin could occur.
Bitcoin Price Eyes Key Resistance Level At $105,400
Crypto analyst Ali Martinez highlighted that current market behavior reflects expectations about future conditions rather than past events. He noted the Fed's updated outlook for 2025 was not well received, with projections for only two anticipated rate cuts instead of three, raising concerns about persistent inflation.
Recent inflation data showed core consumer price index (CPI) figures annualizing at 4% and core personal consumption expenditures (PCE) nearing 3.5%. Producer price index (PPI) figures are similarly trending upward, suggesting ongoing inflation challenges. Martinez pointed out that during Powell's press conference, his description of the decision as a "closer call" indicated disagreement among Fed officials regarding the cuts, which led to a surge in the US dollar, typically correlated with declines in BTC.
Martinez revealed that Bitcoin had broken out of a head-and-shoulders pattern, resulting in its drop just below $99,000. He emphasized that Bitcoin must surpass $105,400 to negate any bearish outlook.
Currently, the Bitcoin price is $101,180, reflecting a 2.2% decrease over the past 24 hours.
Featured image from DALL-E, chart from TradingView.com