The Federal Reserve Open Market Committee (FOMC) announced a 25 basis point interest rate cut on Wednesday, bringing the target Federal Funds rate down to 3.75% to 4%.
Data from CME’s FedWatch tool showed a 96% probability that the Fed would reduce its benchmark rate by 25 basis points, and it did. Hence, many analysts see the move as fully priced in by investors.
(Source: GSR)
As always, asset prices remained flat or fell modestly on Wednesday following the FOMC decision. The price of Bitcoin at 92,000 dollars dropped about 2.4 percent at the time of writing, after Federal Reserve Chair Jerome Powell signaled that FOMC members are divided on a potential December rate cut.
What was Bitcoin’s Reaction to the Previous Rate Cut?
- June 18: Paused. -6.36% Dump.
- July 30: Paused. -5.62% Dump.
- Sept 17: Cut 25bps. -8.10% Dump.
- Oct 29: Cut 25bps. -12.04% Dump.
It is becoming a pattern now. Bitcoin usually rallies ahead of the announcement, then unwinds once Powell speaks.
The Federal Reserve began the 2025 rate-cutting cycle in September with an initial 25-basis-point cut, which helped push BTC to new all-time highs above 125,000 dollars.
More than 75% of market participants expect the Fed to leave interest rates unchanged at the next meeting in January, according to data from the Chicago Mercantile Exchange (CME).
Rate cuts would normally boost asset prices. However, the widely anticipated cuts may now be overshadowed by growing uncertainty from escalating trade tensions between China and the United States, creating hesitation among investors. It is also affected by Federal Reserve Policy Uncertainty and Hawkish Signals.
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Key Takeaways
- Bitcoin keeps dumping after every rate cut because markets have already fully priced in the move, and Powell’s comments drive the real reaction.
- With rising policy uncertainty and US–China tensions, rate cuts alone are not enough to ignite a strong BTC rally right now..
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