Bitcoin fell below $100,000, part of a broader retreat from speculative investment after the Federal Reserve expressed more caution about the extent of future interest rate cuts. As of press time, the digital asset fell approximately 1% to $99,643. This comes after the asset fell more than 5% on Wednesday, its biggest drop since September. Tokens such as Ethereum, Ripple and Dogecoin also suffered heavy losses.
Federal Reserve officials lowered borrowing costs for the third consecutive time but reduced the number of rate cuts they expect in 2025. Chairman Powell said more progress needs to be made on inflation before cutting rates further.
IGA Australia PtyMarket analyst Tony Sycamore wrote in a note that the outcome of the Fed meeting should not surprise investors focused on "recent easing U.S. inflation and economic activity data." “However, it acted as a catalyst to wash away some of the excessive speculation that flowed into risk assets, including stocks and Bitcoin, following the U.S. election,” he said.
The Fed's decision boosted the U.S. dollar index while hurting global stocks and bonds. A dispute over an appropriations bill has raised the risk of a partial U.S. government shutdown and heightened tensions.
Bitcoin has gained 50% since the Nov. 5 U.S. election and hit an all-time high of $108,316 earlier this week, fueled by President-elect Trump's pledge to lift regulatory constraints on cryptocurrencies in the United States. The Republican also supports the idea of establishing a national strategic reserve of the largest digital assets.
Paul Veradittakit, managing partner at Pantera Capital, said that "all signs point to a bottom and a good outlook for Bitcoin," even if some traders were disappointed with the Fed meeting and took profits.
Trump’s support for cryptocurrencies belies warnings about strained momentum and a lack of any traditional valuation restraints. U.S. President Joe Biden's administration has cracked down on the industry after a 2022 market rout exposed risky practices and fraud.