Bitcoin briefly slipped below the $100,000 threshold following comments from Federal Reserve Chair Jerome Powell, which signaled a more cautious approach to interest rate cuts in 2025. The dip—nearly 3%—saw the leading cryptocurrency fall to around $100,750, with an intraday low of $98,792, sparking a wave of derivative liquidations exceeding $850 million.
The market reaction came after the Fed announced a widely expected 25-basis-point rate cut but projected only two additional quarter-point reductions in 2025—fewer than the three or four cuts financial markets had priced in. This more restrained monetary easing outlook, combined with Powell’s explicit dismissal of any Federal Reserve interest in holding Bitcoin, weighed heavily on investor sentiment.
Powell’s Hawkish Tone and Bitcoin Reserve Remarks
During his post-decision press conference, Chair Powell reinforced the Fed’s conservative stance on both monetary policy and digital assets. “We’re not allowed to own Bitcoin,” Powell stated clearly. “That’s the kind of thing for Congress to consider, but we are not looking for a law change at the Fed.”
These remarks effectively ruled out any near-term possibility of the U.S. central bank adopting or stockpiling Bitcoin as part of its reserves. While not unexpected from a regulatory standpoint, the clarity of the statement removed speculative optimism that had been building around potential institutional crypto adoption by central authorities.
Powell’s tone was described as “hawkish” by market analysts, especially given that despite cutting rates, the Fed emphasized data dependency and caution in future decisions. This contrasted with growing expectations of aggressive easing, particularly in light of inflation trends and political shifts.
Market Reaction: Liquidations and Broad Crypto Sell-Off
The combination of reduced rate cut expectations and Powell’s anti-Bitcoin reserve comments triggered a sharp correction across digital asset markets.
At 10:36 AM IST, Bitcoin was trading at $100,750, down 3% on the day. Ethereum followed with a steeper 4.8% decline, trading at $3,656. Other major cryptocurrencies also posted losses:
- XRP: -6.3%
- BNB: -1.1%
- Solana: -4%
- Dogecoin: -6%
- Cardano: -4.2%
- Tron: -3.7%
- Avalanche: -8.3%
- Chainlink: -10%
- Shiba Inu: -6%
According to CoinMarketCap, Bitcoin’s market capitalization dipped below $2 trillion over the past 24 hours, with its dominance holding steady at 57.01%. Trading volume surged by 34.8% to $98.56 billion, reflecting heightened volatility and investor activity.
Dul Patel, CEO of Mudrex, commented: “Bitcoin saw a dip, following Jerome Powell's hawkish remarks on the Federal Reserve’s stance against owning Bitcoin.” Similarly, Vikram Subburaj of Giottus noted: “Bitcoin experienced a significant pullback post-hawkish commentary from the US Fed. Despite a 25bps interest rate cut, the guidance of only two cuts in 2025 dampened market optimism, triggering a sharp correction across crypto.”
Technical Outlook: Support Levels and Consolidation Phase
From a technical perspective, Bitcoin recently formed a ‘Doji’ candle pattern at its peak of $108,353—a classic signal of market indecision and potential trend reversal. This was followed by profit-taking, leading to the current correction.
Analysts at ZebPay Trade Desk suggest that $100,000 and $90,000 will serve as strong support levels for BTC in the coming weeks. If macroeconomic conditions stabilize and inflation data remains favorable, Bitcoin may retest its all-time high later in 2025.
The current price action suggests that Bitcoin is likely entering a consolidation phase after its rapid ascent. Having more than doubled in value over the year—driven by institutional adoption, spot ETF approvals, and optimism around pro-crypto political developments—the asset appears to be pausing for breath.
Core Market Drivers in Focus
Several key factors continue to shape Bitcoin’s trajectory:
1. Monetary Policy Expectations
The pace and timing of Federal Reserve rate cuts remain one of the most influential macro drivers for risk assets, including cryptocurrencies. Lower interest rates typically increase liquidity and investor appetite for higher-risk investments like digital assets.
With only two rate cuts now projected for 2025, some capital has rotated back into safer instruments, temporarily cooling crypto momentum.
2. Institutional Sentiment
Despite Powell’s rejection of a Bitcoin reserve, institutional interest in crypto remains strong. The approval of U.S.-based spot Bitcoin ETFs earlier in the year opened new avenues for traditional finance (TradFi) participation.
Moreover, corporate treasuries and asset managers continue to allocate capital to Bitcoin as a hedge against inflation and currency devaluation.
3. Regulatory Clarity
Clarity—whether from central banks or legislative bodies—plays a crucial role in market stability. While the Fed’s position is clear, ongoing discussions in Congress about digital asset frameworks could open future pathways for broader adoption.
Frequently Asked Questions (FAQ)
Q: Why did Bitcoin drop below $100,000?
A: Bitcoin dipped due to Jerome Powell’s hawkish comments on future rate cuts and the Federal Reserve’s stance against holding Bitcoin. The Fed’s projection of only two rate cuts in 2025—fewer than expected—also triggered investor caution.
Q: Is the Fed planning to buy Bitcoin?
A: No. Chair Powell explicitly stated that the Fed is not allowed to own Bitcoin and is not seeking legislative changes to enable such ownership.
Q: What are the key support levels for Bitcoin?
A: Key support levels are identified at $100,000 and $90,000. These price points are expected to provide stability during market corrections.
Q: How did other cryptocurrencies perform after the Fed announcement?
A: Most major altcoins declined, with losses ranging from 1% to over 10%. Ethereum dropped 4.8%, while Chainlink and Avalanche saw steeper falls.
Q: Could Bitcoin rebound in 2025?
A: Yes. If inflation cools further and the Fed proceeds with rate cuts as projected, combined with sustained institutional demand, Bitcoin could resume its upward trend.
Q: What caused over $850 million in liquidations?
A: The sudden price drop triggered leveraged long positions in futures markets to be automatically liquidated, particularly affecting traders who were overexposed to upward price momentum.
Looking Ahead: Volatility Meets Opportunity
While short-term volatility is inevitable in crypto markets—especially amid macroeconomic uncertainty—the long-term fundamentals of Bitcoin remain intact. Its scarcity model, decentralized nature, and increasing integration into financial infrastructure continue to attract global investors.
As the world moves closer to a more digitized financial system, Bitcoin’s role as a store of value and hedge against monetary expansion is likely to grow—even without central bank endorsement.
For investors, this recent dip serves as a reminder that price corrections are part of the maturation process in any emerging asset class. Strategic entry points during consolidation phases may offer compelling opportunities for those with a long-term outlook.
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