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The price of Bitcoin witnessed a significant decline on Wednesday, as it briefly fell below the $100,000 level, in light of the US Federal Reserve’s dovish outlook on… Interest rate cuts Crypto investments have declined.
At one point in Wednesday’s trading session, the market-leading cryptocurrency fell to $98,760 before recovering to the six-figure mark. Other cryptocurrencies, including Ethereum (ETH) and Dogecoin (DOGE), also faced significant declines.
The Fed’s cautious interest rate cut raises uncertainty in the markets
the Federal Reserve decision The third consecutive cut in borrowing costs came with tempered expectations for future cuts, especially for 2025. Bank President Jerome Powell stressed that more progress on inflation is needed before the central bank can consider further easing of monetary policy.
Tony Sycamore, market analyst at IG Australia Pty, noted that the Fed’s decision was largely expected given recent trends in inflation and economic activity in the US.
However, it served as an incentive to eliminate some of the “speculative surplus” that entered risky assets, incl Stocks And Bitcoin, especially after the recent US elections, according to Sycamore.
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Despite this decline, Bitcoin’s price is still up nearly 50% since the US election on November 5, largely due to President-elect Donald Trump’s commitment to liberalizing the currency. Cryptocurrency sector While the idea of creating a national stockpile of Bitcoin is being mooted, boosting market sentiment.
Paul Viraditakit, managing partner at Pantera Capital, expressed optimism about the future of Bitcoin’s price, saying, “All signs point to a good ground and good outlook for Bitcoin,” even as some traders took profits after the Fed meeting.
Market dynamics changed after the Fed meeting, with Sean McNulty, trading director at liquidity provider Arbelos Markets, reporting an uptick in demand for options to hedge against potential declines in Bitcoin.
Zhan Quan, chief investment officer at Revo Digital Family Office, noted that a temporary pullback to the low $90,000 level for bitcoin is possible.
Bitcoin price is eyeing the major resistance level at $105,400
Cryptocurrency analyst Ali Martinez provided insights into market sentiment, emphasizing that current market behavior reflects expectations about future conditions rather than past events.
analyst male Although the 25 basis point rate cut was widely expected, the Fed’s updated forecast for 2025 was not well received. Instead of three expected interest rate cuts in 2025, the Fed now expects just two, raising concerns about persistent inflation.
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Recent inflation data has also been disappointing, with core CPI figures at 4% annually, and core personal consumption expenditures (PCE) nearing 3.5%. Producer Price Index (PPI) numbers are similarly trending higher, indicating this Economic inflation It can remain an ongoing challenge.
However, Martinez asserts that the real turning point came during Powell’s press conference when he called the decision a “closer call,” indicating that not all Fed officials were on board with the cuts. This sent the US dollar rising to levels not seen since 2022, which are typically associated with Bitcoin declines.
Martinez too It has been detected The price of Bitcoin broke out of a head and shoulders pattern on Wednesday, taking it down to just under $99,000, but he emphasized that the cryptocurrency must surpass $105,400 to nullify any bearish outlook.
At the time of writing, Bitcoin is at $101,180, down 2.2% over the past 24 hours.
Featured image of DALL-E, chart from TradingView.com
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