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Bitcoin’s value dropped to $109,000 Wednesday afternoon after Federal Reserve Chair Jerome Powell indicated that further rate reductions might not occur in December. Since that moment, Bitcoin’s value has stabilized around $111,000.
The decline happened shortly after the central bank decreased its key interest rate by 0.25 percentage points to a target range of 3.75%–4%.
This reduction — the Fed’s second of 2025 following a cut in September — concluded a prolonged period of rate holds. The policy alteration aims to reduce borrowing expenses and bolster economic activity. However, Powell’s remarks indicating that additional cuts are not assured this year incited selling across risk assets.
Prior to the announcement, Bitcoin was trading around $116,000 on Monday and briefly fell below $111,000 early Tuesday. The price briefly rebounded on the news before declining again as Powell spoke. Currently, Bitcoin is trading around $111,200, according to Bitcoin Magazine Pro data.
During the press conference, as Jerome Powell stated that December’s rate cuts aren’t assured, Bitcoin’s price swiftly reacted — plummeting to $109,000 in a sharp red candle before rapidly recovering. The wider crypto market responded in a similar fashion.
Powell mentioned that inflation excluding the effects of tariffs is “not too far” from the central bank’s 2% goal, but he stressed that policymakers have “not made a decision about December.” He noted that officials held “strongly divergent opinions” during today’s meeting.
In the wake of his comments, markets significantly reduced expectations for another rate cut this year. Fed funds futures now indicate a 71% likelihood of a December cut, down from approximately 90% earlier in the day, according to CME data and on prediction markets like Kalshi and Polymarket.
The two-year Treasury yield rose by 9 basis points as traders re-evaluated the Fed’s near-term direction.
Historically, Bitcoin has responded sharply to monetary-policy modifications. After the Fed’s emergency reductions in March 2020, Bitcoin plummeted nearly 39% before recovering. When the Fed cut in September 2025, the market’s reaction was limited — suggesting that expectations were already factored in.
Bitcoin value as Fed indicates conclusion of Quantitative Tightening
Powell also mentioned that the central bank is nearing the end of its Quantitative Tightening program, confirming that the Fed anticipates halting QT by December. This entails allowing some Treasury and mortgage securities to roll off the balance sheet as they mature, instead of reinvesting the principal.
QT diminishes liquidity by contracting the Fed’s balance sheet through allowing government bonds to mature without reinvestment or by selling them into the market.
This process has been in motion since 2022, eliminating nearly $1 trillion in securities as part of efforts to combat inflation.
Ending QT would halt that depletion of liquidity — a transition many analysts believe could eventually foster flows into risk assets, including Bitcoin.
However, Powell cautioned that policy will remain contingent on economic data, adding further uncertainty to market expectations.
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