Bitcoin and the wider crypto market sold off as the Fed announced a 25 basis point rate cut to its benchmark policy rate and signaled that fewer rate cuts than initially planned could take place in 2025. 

Following Fed chair Jerome Powell’s post-rate cut presser, Bitcoin ( BTC ) price dropped 4.6% to $101,300, while Ether ( ETH ) fell 5.96% to $3,600.

Although market participants had anticipated a 0.25% rate cut, which ticks a box for most traders with bullish price expectations, Powell’s indication that only two more rate cuts would occur in 2025 raised eyebrows. Adding to what some traders view as a hawkish outlook, the Fed committee also raised their 2025 inflation outlook from 2.1% to 2.5%. 

BREAKING: The S&P 500 falls sharply after the Fed cuts rates by 25 basis points, but raises inflation forecast.

The Fed reduced their outlook from 3 to 2 rate cuts in 2025 and raised inflation expectations from 2.1% to 2.5%.

Inflation is back. pic.twitter.com/kKtEHD0IF0

— The Kobeissi Letter (@KobeissiLetter) December 18, 2024

The slight shift in perspective essentially takes into consideration upcoming policy changes by the incoming Trump administration, which is expected to roll out tariffs on imported goods, potential mass deportation of millions of undocumented workers and economic policies that could expand the deficit. 

In the presser, Powell emphasized that the re-calibration of Fed policy is a signal that the central bank is ready to adjust its policy to the needs of the US economy. 

Related: Bitcoin may hit $200K by mid-2025 as price drops ‘will remain mild,’ says Bitfinex

Regarding Bitcoin price shorter-term projections, crypto analyst Skew said the drop in BTC cleared “ positioning ” in “both ways,” as longs were stopped out and “shorts closing in profit.”

Buyer fully filled now

not seeing the same passive buying on other spot exchanges

Binance spot for one remains pretty heavy

Bid liquidity remains around $100K - $98K https://t.co/MzhetiJtbC

— Skew Δ (@52kskew) December 18, 2024

Bitcoin price fell into a block of bids in the $100,000 to $98,000 zone, and the analyst said that reclaiming the $100,000 to $101,400 zone via spot bidding would be essential before the daily candlestick close. 

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