A double whammy for stocks and cryptocurrencies! The Fed is expected to cut rates only by 0.5% next year; Tesla plummets 8% as U.S. stocks plunge.

The Federal Reserve of the United States announced this morning a rate cut of 0.25%, but hinted that it will slow down the pace of rate cuts next year, cutting only 0.5% instead of the 1% expected in September. Due to the rate cut speed not meeting market expectations, major U.S. stock indices closed sharply lower today, with the Dow Jones dropping more than 1100 points, marking a continuous decline over 10 trading days. The cryptocurrency market also saw a plunge, with Bitcoin falling below the $100,000 mark. (Background: Bitcoin plunged below $104,000) The probability of a Fed rate cut tonight exceeds 95%, but will it be paused next year? The Fed announced this morning a rate cut of 0.25%, as expected by the market, with the Federal Open Market Committee (FOMC) voting 11 in favor and 1 against, lowering the federal funds rate to a range of 4.25%-4.5%. Cleveland Federal Reserve President Beth Hammack cast the dissenting vote, advocating for unchanged rates. The Fed's hawkish stance, coupled with a double whammy for stocks and cryptocurrencies, has led to a downward revision of next year's rate cut predictions, forecasting a more cautious approach. The new dot plot indicates that according to the median forecast, Fed officials expect the benchmark rate to reach a range of 3.75% to 4% by the end of 2025, meaning there will only be two 0.25% cuts next year, fewer than the 4 cuts expected during the September meeting. Additionally, Fed officials have also lowered the forecast for rate cuts in 2026, with the federal funds rate expected to remain at 3.4% two years from now, higher than the 2.9% expected in September. The Fed now expects that returning inflation to the 2% target will take longer, hence reducing expectations for rate cuts next year. Fed Chair Powell stated at the post-meeting press conference that today’s decision was indeed difficult, but the Fed believes it is the right choice, entering a new phase where further rate cuts will be approached more cautiously, requiring more progress on inflation before considering additional cuts. Due to the rate cut speed not meeting market expectations, the U.S. stock market dropped sharply on Wednesday, with the Dow Jones Industrial Average falling over 1100 points, marking the first continuous decline over 10 trading days since 1974. The performance of the four major U.S. indices is as follows: The Dow Jones Industrial Average fell 1123.03 points or 2.58%, closing at 42326.87 points. The S&P 500 Index fell 178.45 points or 2.95%, closing at 5872.16 points. The Nasdaq Index fell 716.36 points or 3.56%, closing at 19392.70 points. The Philadelphia Semiconductor Index fell 198.81 points or 3.85%, closing at 4970.98 points. All major U.S. stocks also plummeted, with Tesla dropping the most at 8.28%, while Nvidia had the smallest decline at 1.14%. The cryptocurrency market also saw a plunge, with Bitcoin dropping from a morning high of $104,800, falling below the $100,000 mark at around 10 AM, hitting a low of $98,960 and currently reported at $99,632, down 5.5% in 24 hours. Powell stated: The Fed is not allowed to hold Bitcoin. Additionally, Bitcoin's plunge may also be related to Powell's comments indicating that the Fed has no intention of participating in the government's accumulation of large amounts of Bitcoin. At the post-meeting press conference this morning, he stated that the Fed is not permitted to hold Bitcoin, and regarding the legal issues of holding Bitcoin, that is something Congress needs to consider, but the Fed is not currently seeking to modify the law. The incoming President Trump had previously stated that he would establish a strategic Bitcoin reserve for the U.S., but did not provide details on this plan, only mentioning that the approximately 200,000 Bitcoins seized from criminals by the U.S. government could serve as initial reserves. Republican Senator Cynthia Lummis has proposed a bill to establish a national Bitcoin reserve, allowing the Treasury to buy 200,000 Bitcoins annually until accumulating 1 million. However, Barclays analysts released a report this week analyzing that funding for the strategic Bitcoin reserve may require Congressional approval and the issuance of new U.S. bonds, hence the bank is skeptical that this plan will face strong opposition from the Fed. Related reports: The Federal Reserve's spokesperson: The probability of a rate cut in December is 97.1%! Rate cuts are likely to be paused next year. (Volatility warning) The U.S. CPI is approaching; will it pave the way for the Fed's rate cut in December? The U.S. struggles to establish a Bitcoin reserve! Experts say the Fed is currently losing $1 billion weekly, and it has no money to buy BTC. "A double whammy for stocks and cryptocurrencies! The Fed is expected to cut rates only by 0.5% next year; Tesla plummets 8% as U.S. stocks plunge." This article was first published by BlockTempo (the most influential blockchain news media).