Bitcoin and Other Blue-Chip Cryptocurrencies Drop Sharply After Fed Signals Interest Rate Cuts Will Slow in 2025

Bitcoin plunged to $100,800 following Powell's comments. It registered a 5% drop in the past 24 hours after topping $108,000 earlier this week.

Bitcoin and other major cryptocurrencies fell sharply Wednesday after the US Federal Reserve cut interest rates by 0.25%, with Chair Jerome Powell flagging a slower pace of cuts in 2025.

Bitcoin dropped to $100,800 after Powell’s comments, marking a 5% loss over the past 24 hours after rising above $108,000 earlier this week.

Ethereum fell 6% to $3,690, while XRP dropped 9%.

The Federal Reserve began cutting interest rates in September, as inflation cooled and the unemployment rate rose.

Investors had largely expected another cut at Wednesday’s meeting. But Powell described it as a “closer call,” suggesting the central bank considered not cutting rates at all.

While Fed officials at their September meeting projected four interest rate cuts in 2025, projections today showed they are now expecting only two next year.

The move to ultimately cut rates while flagging fewer cuts next year signaled a relatively hawkish stance moving forward, said John Haar, Managing Director at Swan Bitcoin.

On Tuesday, the CME Group’s FedWatch tool showed the odds of another 0.25% cut in January stood at 81%, and the odds of no cut at less than 2%.

After Powell’s press conference Wednesday, that had flipped, with a 91% chance the Fed would hold rates steady in January and a mere 9% chance it cut rates by a quarter of a percent.

“This was a reluctant deduction,” said Seema Shah, chief global strategist, Principal Asset Management. “One designed to give markets a bit of comfort as the Fed lays the groundwork for a more hawkish approach to policy in 2025.”

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