Significant Bitcoin Price Drop Following Fed’s Cautious Rate Cut Indication
Bitcoin’s price dropped by 5.9% to $99,490, following the Fed’s cautious signals on rate cuts. The Fed’s decision comes after Bitcoin surged by 50% since November 5, reaching highs near $108,316 due to political support. Analysts suggest the decline indicates volatility in risk assets, while some remain optimistic about Bitcoin’s future stability.
On Wednesday, Bitcoin recorded its most significant decline in over three months, witnessing a decrease of 5.9% and settling at $99,490. This downturn follows the Federal Reserve’s cautious indication regarding future rate cuts, notably signaling reduced frequency of cuts in 2025, which negatively impacts risk assets, including cryptocurrencies.
Despite the Federal Reserve’s third consecutive rate cut, market analysts suggest that the cautious outlook should not have surprised investors aufgrund of the strong U.S. inflation and economic data recently reported. This announcement ultimately triggered a correction, eliminating some speculative excess related to risk assets, thus contributing to Bitcoin’s price drop.
Previously, Bitcoin had experienced a remarkable rise of 50% since November 5, ascending to an all-time high of $108,316, largely attributed to President-elect Donald Trump’s pro-cryptocurrency advocacy. His endorsement of a national strategic Bitcoin stockpile significantly enhanced investor sentiment. Nevertheless, there remains cautious optimism, as indicated by Pantera Capital’s Paul Veradittakit, who observes promising indicators that suggest a stable floor for Bitcoin, despite some traders capitalizing on the recent price drop.
In summary, Bitcoin’s recent downturn to $99,490 was primarily influenced by the Federal Reserve’s cautious stance on future rate cuts. While the cryptocurrency had seen substantial gains post-election due to supportive political actions, the latest market adjustments remind investors of the volatility inherent in risk assets. Despite the challenges, there is a degree of optimism regarding Bitcoin’s stability moving forward.
Original Source: coinmarketcap.com
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