Bitcoin Declines 4.6% After Federal Reserve’s Rate Decision and Inflation Outlook
Bitcoin’s price dropped 4.6% to $101,300 following the Federal Reserve’s 25 basis point rate cut, driven largely by Fed Chair Jerome Powell’s comments suggesting fewer rate cuts in 2025 and an increased inflation forecast of 2.5%. This triggered a sell-off in the crypto market, resulting in concerns over a hawkish trajectory from the Fed and affecting market confidence.
Bitcoin experienced a significant decline of 4.6% following the Federal Reserve’s recent decision to cut interest rates by 25 basis points. The cryptocurrency market, including Bitcoin and Ether, reacted negatively to remarks made by Fed Chair Jerome Powell, which indicated that fewer rate cuts than anticipated would occur in 2025. Despite the initial market expectations, Powell’s comments pointed to two potential cuts and an increased inflation forecast of 2.5% for the same year, leading to market apprehension.
The price of Bitcoin fell to $101,300, while Ether witnessed a more pronounced decrease of 5.96%, landing at $3,600. Analysts suggest that Powell’s indications fostered a hawkish sentiment among traders, particularly due to looming policy changes with the new administration. Such market reactions have led to the liquidation of both long and short positions, pushing Bitcoin into a bid zone between $100,000 and $98,000. Recovery hinges on Bitcoin reclaiming the pivotal $100,000 to $101,400 range before the daily candlestick closure, which is essential for regaining market confidence.
The cryptocurrency market has recently faced volatility influenced by macroeconomic indicators and central bank decisions. The Federal Reserve’s interest rate adjustments are critical as they affect liquidity and investment behavior in risk assets, including cryptocurrencies. Rate cuts are generally perceived as positive for asset prices, providing an opportunity for recovery, but unexpected commentary from central authorities can lead to rapid sell-offs, as seen with Bitcoin and Ether following the Fed’s announcement.
In conclusion, the immediate future of Bitcoin hinges on its ability to regain the critical price zone between $100,000 and $101,400. The reaction of the market to the Fed’s remarks underscores the delicate balance between anticipated monetary policy adjustments and unforeseen economic projections, such as inflation forecasts, which can significantly impact investor sentiment and market stability.
Original Source: dig.watch
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