In the early hours of Thursday, the Fed cut rates by 25 basis points as expected, but maintained a cautious stance on the pace and speed of future cuts. Bitcoin's price experienced its first drop in four days.
After the Federal Reserve's interest rate decision, Bitcoin's price briefly fell below $101,000, dropping 5%. The previous day, the cryptocurrency had climbed above $108,000 for the first time, creating a record-breaking surge this year. The founder of the cryptocurrency fund Split Capital, Zaheer Ebtikar, stated:
The global market expects the Federal Reserve to become less dovish by 2025. Therefore, cryptocurrency event traders and market makers are reducing risk.
Bitcoin has fallen from its record high
Lower interest rates usually increase demand for most risk assets, such as cryptocurrencies. Currently, speculative bets across the entire financial market are decreasing.
David Lawant, research director at major cryptocurrency broker FalconX, stated that while the predictions of interest rate cuts are currently affecting prices, the declining correlation between Bitcoin and major stock indices may mean it won’t have a long-term impact. Lawant said:
The expectation of a slowdown in interest rate cuts by 2025 is not entirely unexpected, but it has put some pressure on risk assets, including cryptocurrencies. While macro factors traditionally influence cryptocurrency price trends, specific industry factors may dominate in the coming weeks and months, especially when the market anticipates policy changes from the incoming government.
The 'new bond king' Gundlach stated that positions in gold and Bitcoin may continue to increase. In the short term, both gold and Bitcoin are expected to experience sideways fluctuations.
There is ongoing debate about whether the incoming Trump administration will establish a Bitcoin reserve. Previously, Trump's comments suggested that he planned to create a Bitcoin strategic reserve similar to the U.S. Strategic Petroleum Reserve.
Federal Reserve Chairman Powell stated this morning at a press conference that the Fed has no intention of holding Bitcoin. Powell said at the FOMC post-meeting press conference: "We are not allowed to hold Bitcoin." Regarding the legal issues of holding Bitcoin, Powell mentioned, "This is something for Congress to consider, but we have no intention of seeking a change in the law."
The Fed's cautious stance on the interest rate cut path for next year is due to concerns over the potential tariff policies of the Trump administration, which could trigger upward inflation risks.
IG market strategist Yeap Jun Rong wrote in a report that the trajectory of future interest rate cuts by the Fed may depend on the policies of the elected President Trump, which are currently unclear. He noted that Trump's initial comments on tariffs sounded quite aggressive, but the extent of implementation of these measures is uncertain. Yeap stated that as policies become clearer, the Fed may initially prefer a shallower rate-cutting cycle.
As traditional markets cope with inflation, Bitcoin will continue to solidify its position in the financial world. Analysts predict that with favorable regulatory changes and increased corporate adoption, Bitcoin's price could soar to over $200,000 by 2025.
Article republished from: Jin Shi Data
