Bitcoin Liquid Index Drops 10% as FOMC December Rate Cut Odds Lower

The sell-off coincided with hawkish remarks from Federal Reserve Chair Jerome Powell, who, at a Dallas conference, emphasized a cautious approach to rate cuts:

Major crypto sell-off as Powell statement curtails rate cut hopes, XRP surges on legal optimism.

A sell-off hit major cryptocurrencies on Friday as Federal Reserve Chair Jerome Powell’s hawkish remarks and Middle East tensions tempered risk appetite, while XRP soared on optimism over legal challenges to the SEC.

Bitcoin fell 1.7% over the past 24 hours to $71,133 by 04:05 ET (08:05 GMT), while ether dropped 2.3% to $5,606. Both tokens were trading lower for the week.

The sell-off coincided with hawkish remarks from Powell, who, at a Dallas conference, emphasized a cautious approach to rate cuts.

“The economy is not signaling urgency to lower rates,” he said, curbing hopes for rapid easing.

This rhetoric spooked markets, dampening speculative fervor.

As of Friday, traders are pricing in a 66% likelihood of a 25 basis point cut at the December FOMC meeting, a notable drop from the previous day’s 83%.

Powell’s comments reflect the Fed’s confidence in the economy’s resilience, suggesting no immediate need for aggressive monetary easing.

The Fed’s hawkish tone sent ripples beyond crypto. The CME FedWatch tool now places the odds of a December rate cut at 62%, down from 83% just a day prior.

On the other hand, XRP surged 17%, hitting $0.82 in early Asian trading. This rally marks a 50% gain over the past week, fueled by optimism around legal challenges to the SEC.

A coalition of 18 U.S. states recently filed a lawsuit against the regulator, accusing it of unconstitutional overreach.

This development has breathed new life into XRP, which had faced an uphill battle following the SEC’s 2020 lawsuit against Ripple Labs.

Traders are speculating that a potential Trump re-election could usher in a more crypto-friendly regulatory environment, benefiting tokens like XRP and Uniswap (UNI).

Ripple CEO Brad Garlinghouse, who is personally named in the SEC lawsuit, also attended the Cantor event.

“Safe to say that the US is ready to be the crypto capital of the world with the next Trump Administration,” Garlinghouse said in a tweet from the conference.

“Also, an apt shirt to wear on perhaps what are Gary Gensler’s last days in office?!” he added, referring to the SEC chair.

Bitcoin’s slip also comes amid ongoing Middle East tensions, which have historically created mixed market signals for risk assets like crypto.

Meanwhile, gold continues its upward trajectory, signaling a flight to safety.

The market’s gyrations underscore the dual influence of macroeconomic policy and regulatory shifts, setting the stage for a volatile end to the year.