BTC drops as Fed signals uncertainty over future rate cuts
BTC prices fell sharply on Wednesday, extending a wave of tradeing across global risk markets later than the U.S. Federal Reserve signaled a more cautious approach to future rate cuts. The leading cryptocurrency slipped around 3% to trade near $111,000, while U.S. equities also retreated following remarks from Fed Chair Jerome Powell suggesting that additional cuts are not guaranteed.
The Federal Reserve’s decision to reduce interest rates by 25 basis points was widely expected. However, Powell’s post-meeting comments introduced fresh uncertainty, noting that while inflation has moderated, policymakers remain data-dependent and cautious about further loosening monetary policy. This tempered outlook prompted traders to scale back expectations for additional cuts before year-end, sparking volatility across both traditional and digital asset markets.
BTC mirrors risk sentiment amid macroeconomic uncertainty
BTC’s decline underscores its growing correlation with broader financial markets, particularly in response to shifts in monetary policy and liquidity conditions. Over the past year, the cryptocurrency has behaved increasingly like a risk-on asset, often rallying when interest rate expectations turn dovish and retreating when central banks adopt a more hawkish stance.
Data from diverse tracking websites showed probabilities for another rate cut in December falling sharply later than Powell’s remarks. Major stock indices followed suit, with the Nasdaq and S&P 500 each dropping more than 1% as investors reassessed the Fed’s policy trajectory. Meanwhile, the U.S. dollar strengthened, further pressuring BTC and other alternative assets.
Investors focus on inflation and jobs data for next direction
Attention now turns to the upcoming Consumer Price Index (CPI) and nonfarm payrolls reports, both of which could influence the Fed’s policy path in the coming months. A softer inflation reading or signs of cooling in the labor market could reignite hopes for another rate cut and potentially stabilize BTC prices. Conversely, any indication of persistent inflationary pressures may push the central bank to hold rates steady longer, weighing on risk assets.
Analysts say BTC’s near-term outlook remains closely tied to the macroeconomic narrative. Despite optimism surrounding the ongoing institutional adoption of crypto and growing spot ETF inflows, short-term price movements are still driven by interest rate expectations and dollar liquidity.
As traders await further economic data, the cryptocurrency market may continue to experience heightened fluctuations. With BTC hovering just above key technical support levels, the next major move will depend heavily on whether macro conditions shift back in favor of risk-taking and liquidity expansion.
