30s Summary
The US Federal Reserve’s announcement of a 0.25% drop in its benchmark policy rate led to a 4.6% decrease in Bitcoin’s value and a 5.96% fall in Ether. Fed Chair Jerome Powell’s suggestion of only two more rate cuts in 2025 took traders by surprise. Expected policy changes following in the Trump era were factored into the Fed’s strategy. Crypto analyst Skew believes Bitcoin’s price drop facilitated closures of long position traders and profit-taking for short position traders, with the cryptocurrency’s value now significant in the $100,000 to $101,400 range.
Full Article
The news that the Fed was reducing its rate led to a dip in Bitcoin and other cryptocurrencies. After the Fed announced a 0.25% drop in its benchmark policy rate and hinted at fewer reductions in 2025, the price of Bitcoin slumped by 4.6% to $101,300 and Ether fell 5.96% to $3,600.
People who closely follow the market had expected this rate cut, and it seemed to gel with the thinking of most traders hoping for bullish price movements. However, the hint by Fed chair Jerome Powell that only two more rate cuts might happen in 2025 came as a surprise. This more conservative outlook was further underlined by the Fed committee increasing their expected inflation rate for 2025 from 2.1% to 2.5%.
The upcoming changes in policy to be implemented by the incoming Trump administration, including tariffs on imported goods and mass deportation of undocumented workers, could expand the US’s budget deficit. This was probably factored into the Fed’s strategy.
During the press conference, Powell stressed that the Fed was willing to tweak its policy in line with what the US economy needs.
In regards to Bitcoin’s recent drop in price, crypto analyst Skew says this move cleared the way in both directions as it caused the closure of long position traders and profit-taking for short position traders. Bitcoin’s price landed between $100,000 and $98,000. According to the analyst, it’s important for Bitcoin’s price to regain its place in the $100,000 to $101,400 range.
As always, remember that investing always entails risks and you should research carefully before making investment decisions.