Bitcoin briefly dipped below $100,000 on Wednesday, hitting a low of $98,839, according to TradingView data. The drop came after the U.S. Federal Reserve said it plans to significantly reduce its easing measures in 2025.
In the past 24 hours, the broader cryptocurrency market also saw $780.24 million in liquidations.
Fed's hawkish shift surprises markets, sending cryptocurrencies and stocks lower
The US Federal Reserve announced that it plans to significantly reduce its easing measures in 2025. The Fed continued with its 25 basis point rate cut as expected. However, the updated chart, a graph showing interest rate expectations from individual Fed members, indicated a 50 basis point increase. This surprised markets, which had previously expected a 100 basis point cut in 2025.
The shift has spooked markets, sending 10-year US Treasury yields and the US dollar sharply higher while cryptocurrencies and stocks have taken a hit.
Federal Reserve Chairman Jerome Powell said during his press conference:
“It's no different than driving on a foggy night or walking into a dark room full of furniture. You just slow down.” ~Jerome Powell
Bitcoin is trading at $101,393 after paring some losses.
Altcoins Fall as Bitcoin Faces Headwinds from Powell Comments
Aside from Bitcoin, several altcoins also saw significant declines on Wednesday, with Ethereum down 6.5% and XRP down 12.64%. The GMCI 30 Index, which measures the performance of the top 30 cryptocurrencies, fell 7.18% in the last day.
Bitcoin was boosted by US President Donald Trump reaffirming his commitment to creating a national strategic reserve for Bitcoin. Adding to the bullish sentiment, states like Texas, Pennsylvania, and Florida have introduced bills to create Bitcoin reserves, further fueling optimism among traders.
However, Powell said during a press conference on Wednesday that the central bank is not allowed to hold Bitcoin and is “not looking for a change in the law,” in response to a question about his view on the US government’s Bitcoin reserve.
Arthur Hayes, the former CEO of BitMEX and current CEO of Maelstrom Technology, wrote in an article that he expects a major sell-off in the cryptocurrency market around the inauguration of Donald Trump in January. He believes that investors will begin to recognize the gap between their expectations and the reality of the market.
According to Hayes, the market will immediately face the reality that Trump has at best a year to enact any policy changes on or around January 20. He noted that this realization will lead to a sharp sell-off in cryptocurrencies and other Trump 2.0 stocks.
