Bitcoin hovered around the $100,000 mark on Thursday, reflecting market jitters after the Federal Reserve signaled caution regarding further interest rate cuts. The cryptocurrency, which recently hit record highs, dropped as low as $97,073.45 before recovering slightly. This marked its most significant pullback since September, as traders digested the implications of the Fed's latest monetary policy decision.
The Federal Reserve reduced its benchmark interest rate by 0.25%, the third consecutive cut this year, but hinted at fewer reductions in 2025. Fed Chair Jerome Powell underscored the need for continued progress on inflation before implementing further monetary easing. "With today's action, we have lowered our policy rate by a full percentage point from its peak," Powell stated. "We can therefore be more cautious as we consider further adjustments to our policy rate."
Bitcoin's decline mirrored broader market sentiment, with the S&P 500 and Nasdaq 100 falling approximately 3% on Wednesday. Analysts noted that the Fed's stance dampened speculative momentum, impacting both traditional equities and cryptocurrencies.
The recent surge in Bitcoin's value-nearly 50% since the U.S. election on November 5-has been largely attributed to political developments. President-elect Donald Trump's pro-crypto stance, including proposals to ease regulatory constraints and explore a national Bitcoin reserve, has fueled optimism among investors. The cryptocurrency's meteoric rise to six-figure territory has drawn significant attention from retail and institutional participants alike.
However, the Fed's tempered outlook has prompted caution among traders. According to Sean McNulty, director of trading at Arbelos Markets, "There's been an uptick in demand for options to hedge against Bitcoin declines." The sentiment reflects broader concerns about the impact of macroeconomic conditions on high-risk assets.
Despite the recent volatility, Bitcoin remains up 6% for December, demonstrating resilience in the face of short-term corrections. Data from monitoring platform CoinGlass indicated that the cryptocurrency market saw approximately $800 million in liquidations over the past 24 hours, highlighting the intensity of the recent sell-off.
Market participants are closely watching the Federal Reserve's next meeting in January, with CME Group's FedWatch Tool showing only an 8.6% probability of another rate cut. Meanwhile, analysts emphasize the importance of Bitcoin maintaining key psychological levels as it navigates these turbulent waters.
