Bitcoin rallied above $94,000 on Wednesday before swiftly reversing as Federal Reserve Chair Jerome Powell delivered a message that blended dovish concern over the labor market with a firm stance on inflation following a widely expected 25 basis-point rate cut.
After trading around $92,000 for much of the session, bitcoin spiked to roughly $94,400 during Powell’s post-meeting press conference, when he warned the labor market may be weaker than previously thought. The advance faded quickly after Powell stressed that inflation remains too high and that the central bank’s job is not yet finished.
Bitcoin was last trading near $92,000, down about 0.8% over the past 24 hours. Ether continued to outperform, holding above $3,300 and gaining around 1.1% during the same period.
U.S. stocks were modestly higher late in the session, with the Nasdaq up 0.5% and the S&P 500 rising 0.7%. Currency markets saw the sharpest move, with the dollar falling roughly 0.6% against the yen, euro and British pound.
Powell said policy is now “within a range of plausible estimates of neutral,” leaving the Fed well positioned to gauge the timing and scale of any further adjustments. He emphasized that officials are prepared to “wait and see” on additional rate cuts, noting that a heavy slate of economic data will be released ahead of the January meeting.
In addition to the rate cut, the New York Fed said it will begin purchasing short-term Treasury bills and Treasuries with maturities of up to three years if needed, targeting about $40 billion in purchases over the next month starting Friday. The move is intended to ease financial conditions without signaling a return to full-scale quantitative easing. Powell said the purchases will remain “elevated” for several months.
The announcement marks a shift after three years of balance-sheet reduction following the pandemic-era expansion.
Analyst perspectives
“The Fed was careful to signal that this cut does not mark the start of an aggressive easing cycle,” said Daniela Hathorn, senior market analyst at Capital.com, adding that future policy moves will depend heavily on incoming inflation and labor-market data. While officials agreed on modest easing amid uneven post-shutdown data, she said the updated guidance underscored caution.
Brian Coulton, chief economist at Fitch Ratings, said the decision was finely balanced, with two FOMC members voting to keep rates unchanged. A recent mild pickup in core inflation likely tipped the balance toward another cut, while keeping rates slightly above neutral. Coulton said Fitch expects two additional cuts by June 2026, taking the upper bound of the fed funds rate to 3.25%.
David Hernandez, crypto investment specialist at 21Shares, said Powell is “threading the needle” between the Fed’s dual mandate by signaling a potential pause in rate cuts while restarting Treasury purchases. For bitcoin to push higher, Hernandez said it needs fresh momentum to overcome concentrated short positioning near the $94,500 resistance area.
“If spot ETF inflows build as borrowing costs decline, that could be the catalyst that drives bitcoin back above the $100,000 psychological level,” he said.
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