Bitcoin Dips to $109K, Then Stabilizes Amid Fed's Stance

Bitcoin Magazine

Bitcoin Dips to $109K, Then Stabilizes Amid Fed's Stance

On Wednesday afternoon, Bitcoin’s value plummeted to $109,000 following remarks from Federal Reserve Chair Jerome Powell, who indicated that the likelihood of further interest rate cuts in December is uncertain. However, the cryptocurrency has since found a foothold, trading around $111,000.

This sharp decline occurred shortly after the Federal Reserve announced a 0.25 percentage point reduction in its benchmark interest rate, bringing it to a target range of 3.75% to 4%. This marked the Fed's second cut of 2025, following a similar decision made in September, ending a lengthy period of rate stability. The intention behind this policy modification is to lower borrowing expenses and stimulate economic activity. However, Powell’s assertion that additional cuts are not assured this year triggered a wave of selling across various risk assets.

Prior to the Fed's announcement, Bitcoin was trading close to $116,000 on Monday and briefly dipped below $111,000 early Tuesday. Although there was a momentary bounce following the news, the price faltered again during Powell's speech. Currently, Bitcoin is valued at approximately $111,200, based on data from Bitcoin Magazine Pro.

Bitcoin Dips to $109K, Then Stabilizes Amid Fed's Stance During the press conference, Powell’s declaration that December's rate cuts are not guaranteed led to an immediate market reaction; Bitcoin’s price plunged to $109,000 in a swift decline before quickly rebounding. The broader cryptocurrency market exhibited a similar response.

Powell stated that inflation, excluding the effects of tariffs, is "not so far" from the Fed's target of 2%, but he stressed that policymakers have yet to finalize decisions regarding December's rates. He acknowledged that there were “strongly differing views” among officials during the meeting.

In the wake of his comments, market expectations for another rate cut this year were significantly reduced. Data from CME and prediction markets like Kalshi and Polymarket indicate a 71% probability of a December cut, down from roughly 90% earlier that day.

Additionally, the yield on two-year Treasury notes surged by 9 basis points as traders reevaluated the Fed’s short-term outlook.

Historically, Bitcoin has responded dramatically to shifts in monetary policy. After the Fed's emergency rate cuts in March 2020, Bitcoin experienced a nearly 39% decline before recovering. In contrast, the reaction to the September 2025 rate cut was less pronounced, implying that the market had already factored in those expectations.

https://coinzn.org/ Powell also indicated that the Federal Reserve is nearing the conclusion of its Quantitative Tightening (QT) program, confirming that the central bank anticipates halting QT by December. This policy involves allowing some of its Treasury and mortgage security holdings to mature without reinvestment of the principal amount, effectively reducing its balance sheet.

QT aims to decrease liquidity by allowing the Fed’s balance sheet to shrink through maturing government bonds without reinvestment or by selling them into the market. This strategy has been in effect since 2022, resulting in a reduction of nearly $1 trillion in securities as part of the Fed’s efforts to combat inflation.