The hawkish Federal Reserve impacts risk appetite! Bitcoin falls below the $100,000 mark, recording the largest decline since September
Bitcoin fell below $100,000, marking the largest decline since September, as the Federal Reserve's cautious stance on interest rate cuts led to a retreat in speculative investments. The Federal Reserve lowered borrowing costs for the third consecutive time but is expected to reduce the number of rate cuts in 2025. The dollar index rose, impacting global stock and bond markets. Although Bitcoin has risen 50% since November 5, the market's reaction to the Federal Reserve triggered some profit-taking. Trump's support for cryptocurrencies contrasts with warnings about market risk behavior
According to Zhitong Finance APP, Bitcoin has fallen below $100,000, which is part of a broader retreat in speculative investments following the Federal Reserve's more cautious stance on future interest rate cuts.
As of the time of writing, the digital asset is down about 1% to $99,643. Previously, the asset dropped over 5% on Wednesday, marking its largest decline since September. Tokens such as Ethereum, Ripple, and Dogecoin also suffered significant losses.
Federal Reserve officials have lowered borrowing costs for the third consecutive time but have reduced their expectations for the number of rate cuts in 2025. Chairman Jerome Powell stated that more progress needs to be made on inflation before further rate cuts can occur.
Tony Sycamore, a market analyst at IG Australia Pty, wrote in a report that the outcome of the Federal Reserve meeting should not surprise investors who are focused on "recently easing U.S. inflation and economic activity data." He noted, "However, it acted as a catalyst, washing away some of the excessive speculation that flowed into risk assets (including stocks and Bitcoin) after the U.S. elections."
The Federal Reserve's decision boosted the U.S. dollar index while harming global stock and bond markets. Disputes surrounding a funding bill have increased the risk of a partial government shutdown in the U.S., heightening tensions.
Since the U.S. elections on November 5, Bitcoin has risen by 50% and hit a record high of $108,316 earlier this week, thanks to incoming President Trump’s promise to lift regulatory burdens on cryptocurrencies in the U.S. The Republican also supports the idea of establishing a national strategic reserve for the largest digital assets.
Paul Veradittakit, managing partner at Pantera Capital, stated, "All signs indicate that Bitcoin's bottom is in and the outlook is good," even as some traders expressed disappointment with the Federal Reserve meeting and took profits.
Trump's support for cryptocurrencies has overshadowed warnings about momentum tensions and the lack of any traditional valuation constraints. Following the market crash in 2022 that exposed high-risk behaviors and fraud, the Biden administration has cracked down on the industry