The price of Bitcoin fell sharply on Wednesday, falling below the $100,000 milestone as the US Federal Reserve (Fed) looked cautiously at it. cut interest rates decrease in crypto investments.
At one point in Wednesday's trading session, the market's main crypto fell to $98,760 before recovering to the six-figure mark. Other cryptocurrencies, including Ethereum (ETH) and Dogecoin (DOGE), also faced significant gains.
Fed's cautious rate cut raises uncertainty in markets
The Federal Reserve Decision borrowing costs fell for the third consecutive time with a tight forecast for future reductions, especially for 2025. Chairman Jerome Powell emphasized that more progress on inflation is needed before the central bank can consider further easing of monetary policy.
Tony Sycamore, market analyst at IG Australia Pty, noted that the Fed's decision was largely expected given the recent trends in inflation and US economic activity.
However, it was instrumental in losing some of the “speculative excess” that had gone into risk funds, including stocks and Bitcoin, especially after the recent US elections, according to Sycamore.
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Despite this drop, the price of Bitcoin is still up about 50% since the US elections on November 5, largely due to President-elect Donald Trump's commitment to presidential deregulation. cryptocurrency sector while floating the idea of establishing a national stock pool of Bitcoin, strengthening the market sentiment.
Paul Veradittakit, managing partner at Pantera Capital, expressed optimism about the future of Bitcoin's price, saying, “All signs point to a good floor and outlook for Bitcoin,” even as some traders took -trade profits after the Fed meeting.
Market dynamics shifted after the Fed meeting, with Sean McNulty, director of trading at liquidity provider Arbelos Markets, reporting an increase in demand for options to hedge against a possible Bitcoin decline.
Zann Kwan, chief investment officer at Revo Digital Family Office, indicated that a temporary pullback to the low $90,000s is possible for Bitcoin.
Bitcoin Price Eyes Key Resistance Level At $105,400
Crypto analyst Ali Martinez provided insights on market sentiment, stressing that current market behavior reflects expectations of future conditions rather than past events.
The analyst was noted while the 25 basis point rate cut was widely expected, the Fed's updated forecast for 2025 was not well received. Instead of three rate cuts expected in 2025, the Fed is not now planning just two, raising concerns about continued inflation.
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Recent inflation data has also been discouraging, with core consumer price index (CPI) figures coming in at an annual rate of 4% and core personal consumption expenditures (PCE) nearing 3.5%. Producer price index (PPI) figures are also rising, suggesting that inflation it could remain an ongoing challenge.
However, Martinez emphasizes that the real turning point came at Powell's press conference when he described the decision as a “closer call,” indicating that not all Fed officials agreed. about the cuts. This sent the US dollar rising to levels not seen since 2022, which is usually associated with a decline for BTC.
Martinez too published that the price of Bitcoin had broken out of the head and shoulders pattern on Wednesday, which led to a drop slightly below $99,000, but he emphasized that the digital currency must exceed $105,400 to negate any positive outlook .
At the time of writing, the price of Bitcoin is at $101,180, down 2.2% over the past 24 hours.
Featured image from DALL-E, chart from TradingView.com
