Bitcoin sinks below $100,000, altcoins fall after hawkish Fed signals

Key Takeaways

Bitcoin price fell below $100,000 due to Federal Reserve's hawkish stance.
Meme tokens saw a huge drop in market sales.

Bitcoin fell nearly 6%, trading below $100,000 amid market-wide selling after the Fed adopted a hawkish tone at Wednesday's FOMC meeting, according to data from CoinGecko.

The Fed cut its benchmark interest rate with 25 basis points as expected but only two rate cuts were expected in 2025, down from the previous forecast of four cuts. Fed Chairman Jerome Powell indicated that the central bank would be more cautious when considering further changes to its policy rate.

The Fed's surprisingly hawkish stance has prompted analysts to change they have rate cut predictions. Analysts at Morgan Stanley noted that they no longer expect a rate cut in January 2025.

Likewise, market expectations for a rate cut at the Fed meeting in January have diminished. The probability of a rate cut at the January Fed meeting fell to 8.6%, based on CME's FedWatch Tool datawhile the likelihood that current rates will be maintained rose to 91% from around 81% a day earlier.

Stock and crypto markets reacted strongly to Powell's hawkish signals. The Nasdaq fell more than 3%, and the Dow recorded its longest losing streak in 50 years. The dollar hit a two-year high as bond yields rose above the curve.

Bitcoin briefly lost $5,000 during Powell's speech and fell to $98,900 on Wednesday night before recovering to $100,000. Other crypto assets also declined, with Ethereum falling over 5% to $3,600, Ripple falling nearly 9%, and Dogecoin declining 8%, according to CoinGecko data.

Meme tokens saw the steepest drop over 24 hours, with Popcat (POPCAT) dropping 20% and Peanut the Squirrel (PNUT) dropping 19%. Other meme coins including Pepe (PEPE), dogwifat (WIF), Bonk (BONK), and Floki (FLOKI) recorded double-digit losses.