Bitcoin Falls to $101K, Altcoins Tumble Following Hawkish Federal Reserve Remarks

Fed Cuts Rates by 25 Basis Points; Hawkish Powell Sends Markets into Turmoil

The Federal Reserve delivered a widely anticipated 25-basis-point rate cut on Wednesday, lowering the federal funds rate to a range of 4.25%-4.50%. This marks the third consecutive reduction this year, totaling 100 basis points since September. However, it was Fed Chair Jerome Powell’s cautious and hawkish commentary that stole the spotlight, triggering sharp market reactions.

While the rate cut was priced in by markets, attention turned to the Fed’s economic projections and Powell’s press conference for insights into the path forward. The central bank’s latest “dot plot” signaled a slower pace of easing in 2025, with the federal funds rate now projected to sit at 3.9% by year-end—up from 3.4% forecasted in September. Inflation estimates also climbed, with PCE inflation for 2025 revised upward to 2.5%.

Crypto Market and Traditional Assets React
Bitcoin (BTC), which traded around $104,000 before the announcement, dropped to $101,000, shedding nearly 5% in 24 hours. Major altcoins suffered steeper losses, with XRP, Cardano’s ADA, and Litecoin’s LTC plunging by almost 10%. U.S. equities weren’t spared, as the S&P 500 fell to session lows following Powell’s remarks.

During the press conference, Powell emphasized that the tempered pace of future rate cuts reflects persistent inflation concerns. “We are closer to what we consider a neutral rate, which makes further adjustments more measured,” Powell remarked.

Responding to speculation about government involvement in cryptocurrencies, Powell dismissed the idea of a strategic bitcoin reserve, reiterating that the Federal Reserve is not authorized to hold bitcoin under current regulations and has no plans to advocate for such a change.

Expert Commentary on Macro Conditions
Andre Dragosch, European Head of Research at Bitwise, pointed to tightening financial conditions as a key challenge for the Fed. “Despite rate cuts, long-term yields and mortgage rates have risen, and the dollar’s appreciation further tightens conditions,” Dragosch explained.

He also highlighted the implications of a strong dollar on cryptocurrency markets. “Dollar strength typically signals global liquidity contraction, which weighs heavily on bitcoin and other crypto assets. However, on-chain data for bitcoin remains positive, with declining exchange balances supporting a tightening supply narrative,” Dragosch noted.

With inflation pressures and liquidity constraints shaping the Fed’s cautious outlook, the reaction across crypto and traditional markets underscores the delicate balance the central bank faces as it navigates a challenging economic landscape.