Bitcoin just experienced a significant drop for the first time in four days, losing 5.3% of its value and falling to $100,752. This occurred right after the U.S. Federal Reserve announced a 0.25 percentage point rate cut, while simultaneously signaling a more cautious easing policy than expected.
Market reaction
• Bitcoin and other risky assets are under significant pressure as investors worry that a slower pace of easing could reduce the attractiveness of these assets.
• The yield on two-year U.S. Treasury bonds rose to 4.33%, while the USD increased by 1% against a basket of major currencies.
• The stock market is also affected, with the S&P 500 index dropping 1%.
Message from the Fed
Although a rate cut is the expected move, the Fed's forecast for future interest rates is more cautious:
• The benchmark interest rate is expected to decrease to 3.75-4% by 2025, lower than previous expectations.
• Fed Chairman Jay Powell stated that the pace of rate cuts will be considered more carefully, prioritizing inflation control over strong economic stimulus.
• The Fed raised its forecast for the neutral interest rate to 3% (up from the previous 2.5%) and maintained its core inflation expectation at 2.5% by 2025.
Long-term impact
The Fed continues to maintain a 'cautious' stance in adjusting monetary policy. This creates instability for speculative assets like Bitcoin, which are sensitive to changes in borrowing costs and market outlook.
In the short term, this drop reflects the concerns of investors, but the future of Bitcoin will depend heavily on macroeconomic factors and the attitudes of policymakers in the near future.