After the Federal Reserve announced the widely anticipated interest rate cut decision, Bitcoin and cryptocurrencies fell sharply. Why?

After Federal Reserve officials suggested a more cautious approach to continuing rate cuts, speculation in the financial markets decreased, causing Bitcoin to drop for the first time in four days.

According to market capitalization rankings, the leading cryptocurrency fell by about 5% the day after it first surpassed the historical high of $108,000 this year, but as of 11:30 PM (Beijing time), it was still trading around $101,400, surpassing the psychological threshold of $100,000.

Apart from Bitcoin, all cryptocurrencies in the top 20 by market cap fell. The biggest declines were seen in XRP, Avalanche, and Stellar, which dropped by 10%, while Polkadot and Dogecoin fell by 9%, and Tron, Shiba Inu, and TonCoin decreased by 8%.

Fed officials have limited the number of rate cuts they expect in 2025. If you ask why this affects cryptocurrencies, lower interest rates typically increase demand for higher-risk assets like cryptocurrencies. However, high interest rates diminish interest in high-risk assets such as cryptocurrencies.

This is not investment advice.