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The price of Bitcoin fell sharply on Wednesday, briefly falling below the $100,000 milestone as the US Federal Reserve’s (Fed) took a cautious approach. reduction of interest rate crypto investment has been reduced.
At one point in Wednesday’s trading session, the market-leading crypto fell as low as $98,760 before recovering to six levels. Other cryptocurrencies, including Ethereum (ETH) and Dogecoin (DOGE), have also experienced major recoveries.
Fed’s Cautious Rate Cut Causes Uncertainty in Markets
I Federal Reserve decision lowering borrowing costs for the third time in a row came with a strong forecast for future reductions, especially in 2025. Chairman Jerome Powell stressed that more progress is needed on inflation before the central bank considers further expansion of monetary policy.
Tony Sycamore, market analyst at IG Australia Pty, noted that the Fed’s decision was widely expected given recent trends in inflation and US economic activity.
However, it served as an incentive to dispose of some of the “excessive considerations” that had gone into risky assets, including shares and Bitcoin, especially following the recent US election, according to Sycamore.
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Despite this decline, the price of Bitcoin has remained up almost 50% since the US election of November 5, mainly due to the commitment of President-elect Donald Trump to deregulation. cryptocurrency sector while floating the idea of ​​establishing a national Bitcoin mass, further increasing market sentiment.
Paul Verradittakit, managing partner at Pantera Capital, expressed optimism about the future of Bitcoin’s price, saying, “All signs point to a positive bottom and the outlook for Bitcoin,” as some traders took profits after the Fed meeting.
Market dynamics have changed post-Fed meeting, with Sean McNulty, director of trading at the liquidity provider Arbelos Markets, reporting the rise in demand for options to commit to a possible reduction in Bitcoin.
Zann Kwan, chief investment officer of the Revo Digital Family office, indicated that a short-term retreat to the low $ 90,000s of Bitcoin is possible.
Bitcoin Price Eyes Key Resistance Level at $105,400
Crypto analyst Ali Martinez provided insight into market sentiment, stressing that current market behavior reflects expectations of future conditions rather than past events.
Analyst noted that while a 25 basis point reduction was widely expected, the Fed’s revised outlook for 2025 was not well received. Instead of three expected rate cuts by 2025, the Fed now projects only two, raising concerns about continued inflation.
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Recent inflation data has also been disappointing, with the core consumer price index (CPI) annualized at 4% and personal consumption expenditures (PCE) nearing 3.5%. Producer price index (PPI) figures are similarly trending higher, suggesting that inflation it can always be a constant challenge.
However, Martinez insists that the real turning point came during Powell’s press conference when he described the decision as a “close call,” indicating that not all Fed officials were in agreement about the cuts. This has sent the US dollar soaring to levels not seen since 2022, which often correlates with BTC’s decline.
Martinez again revealed that the price of Bitcoin broke the head and shoulders pattern on Wednesday, which led to its drop below $ 99,000, but emphasized that the cryptocurrency must exceed $ 105,400 to ignore any bearish look.
At the time of writing, the price of Bitcoin stands at $101,180, down 2.2% in the last 24 hours.
Featured image from DALL-E, chart from TradingView.com
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