Bitcoin Price Plummets 6%, Trading Under $100,000 Amid Market-Wide Sell-Off

Market Reaction to Fed’s Hawkish Tone

Bitcoin experienced a considerable drop, falling close to 6% and trading under $100,000. This decline occurred amid a market-wide sell-off following the Federal Reserve’s hawkish tone at Wednesday’s FOMC meeting.

According to data from CoinGecko, the Fed’s decision to cut its benchmark interest rate by 25 basis points, while projecting only two rate cuts in 2025, has rattled the market.

Fed’s Cautious Stance

Fed Chair Jerome Powell indicated that the central bank would be more cautious when considering further adjustments to its policy rate. “The only way to get what you want in this world is through hard work,” Powell stated, emphasizing the need for a careful approach. This surprisingly hawkish stance has prompted analysts to adjust their rate cut forecasts.

Impact on Stock and Crypto Markets

The stock and crypto markets reacted strongly to Powell’s hawkish signals. The Nasdaq dropped more than 3%, and the Dow recorded its longest losing streak in 50 years. Bitcoin briefly lost $5,000 during Powell’s speech, falling to $98,900 on Wednesday evening before recovering above $100,000. Other crypto assets also declined, with Ethereum falling over 5% to $3,600, Ripple dropping nearly 9%, and Dogecoin declining 8%.

Meme Tokens Experience Steep Declines

Meme tokens experienced the steepest declines over 24 hours. Popcat (POPCAT) fell 20%, and Peanut the Squirrel (PNUT) dropped 19%. Other meme coins, including Pepe (PEPE), dogwifhat (WIF), Bonk (BONK), and Floki (FLOKI), all recorded double-digit losses.

Analysts’ Adjusted Forecasts

Analysts at Morgan Stanley noted that they no longer expect a rate reduction in January 2025. Market expectations for a rate cut at the Fed’s January meeting have diminished, with the probability of a rate cut falling to 8.6%, based on CME FedWatch Tool data. The likelihood of maintaining current rates rose to 91% from about 81% a day earlier.

The Fed’s hawkish stance has had a profound impact on both stock and crypto markets, leading to significant declines in Bitcoin and other digital assets. As the market adjusts to the Fed’s cautious approach, investors will need to stay vigilant and adapt to the evolving economic landscape. How do you think the Fed’s stance will impact the crypto market in the long term?

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