Bitcoin and the broader cryptocurrency market declined after the Federal Reserve announced a 25 basis point reduction in its benchmark policy rate and indicated that there might be fewer rate cuts in 2025 than originally anticipated. After Fed Chair Jerome Powell's press conference following the rate cut, Bitcoin's price decreased by 4.6% to $101,300, and Ether declined by 5.96% to $3,600.
While market participants had expected a 0.25% rate reduction, aligning with the bullish price expectations of most traders, Powell's statement that only two more rate cuts would happen in 2025 surprised many. Further contributing to what some traders perceive as a hawkish stance, the Fed committee also increased their 2025 inflation forecast from 2.1% to 2.5%. The minor change in viewpoint primarily accounts for anticipated policy changes from the incoming Trump administration, which is likely to introduce tariffs on imported goods, possibly deport millions of undocumented workers, and implement economic policies that might increase the deficit.
During the press conference, Powell highlighted that the Fed's policy adjustment indicates the central bank's willingness to tailor its policy to meet the requirements of the US economy. In terms of short-term Bitcoin price forecasts, crypto analyst Skew noted that the decline in BTC cleared "positioning" in "both directions," with longs being stopped out and "shorts closing in profit."
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