Bitcoin’s price slipped to $109,200 on Wednesday, falling more than 6% from its Monday peak of $116,400, as traders awaited the Federal Reserve’s widely anticipated 25 basis point interest rate cut.
The drop surprised some analysts, given that most expected the rate decision to be priced into markets.
Despite the modest policy shift, risk appetite weakened as investors grew cautious about the Fed’s future trajectory and broader economic conditions.
Fed Signals End of Balance Sheet Reduction
The Fed’s statement confirmed that quantitative tightening would end on December 1, marking a significant policy shift after months of balance sheet contraction.
This change, often viewed as supportive for markets, did little to immediately lift crypto sentiment.
The central bank’s updated “dot plot” now points to three interest rate cuts in 2025, with Goldman Sachs analysts forecasting two more 25 basis point cuts by March and June 2026.
If realized, the Fed’s benchmark rate would settle between 3% and 3.25%, suggesting a gradual easing cycle ahead.
Analysts Expect Short-Term Volatility
According to Hyblock, a crypto analytics platform, Bitcoin’s post-FOMC reactions often follow a familiar pattern: short-term declines followed by recovery.
“Recent history has shown that the FOMC leads to a price drop in BTC, followed by a move up,” the firm noted.
“If price does dip post-FOMC and signs of bullish confluence emerge, such as bid-heavy orderbooks, it would likely present good opportunities for investors.”
Despite that, sentiment remains cautious.
Traders are looking beyond the rate cuts to evaluate the broader economic landscape—especially the impact of U.S. layoffs, ongoing trade tensions under President Trump’s renewed tariff push, and questions surrounding the sustainability of the artificial intelligence boom.
Broader Economic Concerns Cloud Bitcoin Outlook
While Wednesday’s rate cut was fully expected, the market is now focused on Powell’s upcoming remarks at the FOMC press conference.
Investors hope for clarity on how the Fed plans to navigate slowing growth, lingering inflation risks, and market liquidity conditions heading into 2026.
For now, Bitcoin’s reaction underscores continued sensitivity to macroeconomic developments, particularly as the Fed transitions from tightening to a more accommodative stance.
