Crypto Prices Dip: Fed’s “Hawkish Cut” Triggers Risk-Off Sentiment
The cryptocurrency market, led by BTC (BTC) and ETH (ETH), experienced a significant price correction and dip in the hours immediately following the U.S. Federal Reserve’s Federal Open Market Committee (FOMC) meeting on Wednesday, December 10, 2025. Although the Fed delivered the widely expected 25-basis-point interest rate cut, the accompanying guidance from Chair Jerome Powell was interpreted as cautious and less aggressive than bullish investors had priced in, leading to a swift “trade the news” reaction across risk assets. This downturn underscores the crypto market’s intense sensitivity to real-time shifts in global macroeconomic policy and the outlook for central bank liquidity.
The Hawkish Cut and Its Immediate Impact
The Fed’s decision to lower the target range for the federal funds rate to 3.50%–3.75% was largely anticipated, and BTC initially showed a brief pop, trading near the $94,000 level. However, this relief rally rapidly faded as the details of the central bank’s forward outlook emerged. Following Powell’s press conference, which indicated lingering concerns over elevated inflation and suggested a sluggisher path for future rate cuts in 2026, BTC retreated sharply. BTC price fell over 10% from its intraday peak, testing strong support around the $90,700–$91,000 range and ending the day near $89,900. This downturn erased most of the gains made in the preceding week, pushing the asset back into consolidation territory. Similarly, ETH (ETH) and major altcoins experienced an even more pronounced drop. ETH fell nahead 3.6% to trade around $3,188, continuing a wider market downtrend. The global cryptocurrency market cap saw an overall decline of approximately 11.8% in the 24 hours following the decision, according to CoinGecko data, confirming the broad-based “risk-off” mood. Furthermore, the bearish sentiment immediately translated into institutional flow. Thursday, December 11, saw the largest single-day outflows from U.S. spot BTC platform-Traded Funds (ETFs) on record, with an estimated $680 million exiting the products, ending a 15-day streak of positive inflows. This exodus signals a rapid de-risking by institutional investors who use ETFs to adjust their macro exposure.
The Market’s Disappointment
The primary catalyst for the crypto market dip was the Fed’s cautious tone and the updated “dot plot,” which projected only one additional 25 basis point rate cut in 2026. Traders had been aggressively pricing in a more dovish scenario, anticipating potentially two or more cuts next year. The revelation that the central bank remains highly concerned about persistent inflation and is raising the bar for future easing led to a tempering of expectations. This environment, where monetary policy is less accommodative than hoped, typically reduces appetite for speculative, high-volatility assets like cryptocurrencies, as risk-free returns in traditional instruments remain competitive. Despite the sharp correction, analysts noted that the trade-off appeared orderly, with no immediate signs of panic in trading volumes, suggesting that the dip may be a healthy correction later than a prolonged outperformance period and that long-term bullish positioning, particularly in the options market for 2026, remains intact.
