Bitcoin Price Crashes To $109,000, Fed Cuts Rates
Bitcoin’s price experienced a sharp drop to $109,000 on Wednesday afternoon following Federal Reserve Chair Jerome Powell’s indication that additional rate cuts may not occur in December. The price has since stabilized around $111,000. This decline came shortly after the central bank lowered its benchmark interest rate by 0.25 percentage points to a target range of 3.75%–4%.
The rate cut, which marked the Fed’s second of 2025 after a previous move in September, ended a period of prolonged rate stability. The decision was made to decrease borrowing costs and stimulate economic activity. However, Powell’s remarks suggesting that further cuts are not guaranteed for the remainder of the year triggered a sell-off across risky assets.
Prior to the announcement, Bitcoin was trading near $116,000 on Monday and briefly dipped below $111,000 early Tuesday. The price saw a brief uptick upon the news before sliding again during Powell’s statements. Currently, Bitcoin is trading around $111,200, according to Bitcoin Magazine Pro data.
During the press conference, Powell’s comments about the uncertainty of December’s rate cuts led to an immediate reaction in Bitcoin’s price, causing a sharp drop to $109,000 in a rapid red candle before quickly rebounding. The broader cryptocurrency market responded in a similar fashion.
Powell mentioned that inflation, excluding the impact of tariffs, is close to the central bank’s 2% target but emphasized that a decision regarding December has not been finalized, highlighting differing views among officials during the meeting. This caused expectations for another rate cut this year to be significantly reduced, with Fed funds futures now pricing a 71% chance of a December cut, down from approximately 90% earlier in the day.
In response to the Fed’s indication of the end of Quantitative Tightening (QT) by December, which involves allowing certain holdings of Treasuries and mortgage securities to mature without reinvestment, Bitcoin price as well as the broader market may see a potential shift in liquidity flows. QT has been ongoing since 2022, removing nearly $1 trillion in securities as part of efforts to combat inflation.
Ending QT would halt the liquidity drain, a move that many analysts believe could eventually lead to increased flows into risk assets like Bitcoin. However, Powell cautioned that policy decisions will continue to be data-dependent, introducing additional uncertainty into market expectations. This shift in policy direction could have significant implications for Bitcoin and the broader cryptocurrency market as investors navigate the evolving landscape of monetary policy.
