Why is crypto down? Fed Chair Jerome Powell’s latest monetary policy update just hit the crypto markets like a hammer. Bitcoin, which had one foot over the $100k line, stumbled, dropping 4.6% to $101,300 after the 25 basis point rate cut announcement.
Ethereum followed suit, shedding 5.96% and landing at $3,600 in the aftermath. What’s happening here?
Why Is Crypto Down? Bitcoin Reacts To Rate Adjustments
As one Twitter user wrote of the event, “Jewome said somethwing vewy beawish about 2025 (no more wate cwuts) to stand up to big meanie Twumpy!!!”
Indeed. Powell labeled this latest rate cut a “closer call,” framing sticky inflation data as the elephant in the room. Cleveland Fed President Beth Hammack dissented, favoring no movement on rates at all.
Economic growth looks slightly rosier, unemployment marginally lower, but inflation in 2025 is ticking upward more than they’d hoped. The Fed pared back next year’s plans to just two rate cuts, scrapping September’s more aggressive playbook of four.
Adding fuel to the fire, Powell commented on a BTC strategic reserve, saying, “‘We’re Not Allowed to Own Bitcoin,” yet later added, “That’s the kind of thing for Congress to consider.”
Crypto analysts didn’t waste time dissecting the fallout. Trader Skew pointed out that Bitcoin’s slide wiped out positions across the board. The key now is to regain ground in the $100,000 to $101,400 range before the daily close.
“Bitcoin price fell into a block of bids in the $100,000 to $98,000 range. Spot bidding in this region will determine the short-term trajectory,” said Skew.
Additionally, CryptoQuant analyst Percival flagged a shift in the market flow, noting profit-taking by long-term holders has steeply declined. Realized profits nosedived from $10 billion to $3 billion in just three weeks, hinting that these investors are now content to sit tight and wait for the next wave of gains.
Coinbase Premium And Institutional Demand
Despite Bitcoin’s recent rally to an all-time high of $103,700 earlier in the month, some analysts are noting waning U.S. demand. CryptoQuant data revealed a notable decline in Coinbase’s BTC premium, an indicator of institutional interest. Pseudonymous trader Yonsei Dent warned that this could reflect underlying weaknesses in Bitcoin’s medium-term momentum.
“The falling Coinbase premium could indicate reduced demand from U.S. buyers. Investors should monitor this trend closely,” Dent noted.
A Hawkish Fed And Bitcoin’s Future
Still, Powell’s comments regarding the Fed’s inability to hold Bitcoin as part of its reserves might be the biggest death blow to the markets. Of course, the US government could always add BTC to the treasury.
“We’re not allowed to own Bitcoin. The Federal Reserve Act defines our asset capabilities, and we’re not seeking to change that,” Powell explained.
The idea of President-elect Trump treating Bitcoin as a strategic U.S. reserve has sparked predictions and debates about its long-term market effects. Although Bitcoin slipping under $100,000 rattled some nerves, seasoned traders see the pullback as nothing more than market mechanics. Optimistic holders and analysts argue the setup still favors a big climb by 2025.
The Bitcoin price analysis 2025 highlights that while short-term turbulence is expected, the broader narrative of Bitcoin’s adoption and appeal among both retail and institutional investors remains strong.
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