The Bitcoin price experienced a significant downturn on Wednesday, briefly falling below the $100,000 milestone as the US Federal Reserve’s (Fed) cautious outlook on interest rate cuts dampened crypto investments.
At one point in Wednesday’s trading session, the market’s leading crypto dropped to $98,760 before recovering to the six-figure mark. Other cryptocurrencies, including Ethereum (ETH) and Dogecoin (DOGE), also faced substantial retraces.
Fed’s Cautious Rate Cut Sparks Uncertainty In Markets
The Federal Reserve’s decision to lower borrowing costs for the third consecutive time came with a tempered forecast for future reductions, particularly for 2025. Chair Jerome Powell emphasized that more progress is needed on inflation before the central bank can consider further easing of monetary policy.
Tony Sycamore, a market analyst at IG Australia Pty, noted that the Fed’s decision was largely anticipated given recent trends in US inflation and economic activity.
However, it acted as a catalyst for shedding some of the “speculative excess” that had entered risk assets, including stocks and Bitcoin, especially following the recent US elections, according to Sycamore.
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Despite this dip, the Bitcoin price remains up approximately 50% since the US elections on November 5, largely due to President-elect Donald Trump’s commitment to deregulating the cryptocurrency sector while floating the idea of establishing a national stockpile of Bitcoin, further boosting market sentiment.
Paul Veradittakit, managing partner at Pantera Capital, expressed optimism about the Bitcoin price future, stating, “All signs point to a good floor and outlook for Bitcoin,” even as some traders took profits following the Fed meeting.
Market dynamics shifted post-Fed meeting, with Sean McNulty, director of trading at liquidity provider Arbelos Markets, reporting an uptick in demand for options to hedge against potential Bitcoin declines.
Zann Kwan, chief investment officer at Revo Digital Family Office, indicated that a temporary retreat into the low $90,000s for Bitcoin is possible.
Bitcoin Price Eyes Key Resistance Level At $105,400
Crypto analyst Ali Martinez provided insights into market sentiment, emphasizing that current market behavior reflects expectations about future conditions rather than past events.
The analyst noted that…
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