Interest Rate Decision and Bitcoin's Reaction
Despite a lack of economic data, the Federal Reserve (Fed) announced a 25 basis point interest rate cut yesterday evening, aligning with market expectations.
However, Bitcoin (BTC) exhibited a weak trend following the announcement, briefly dipping below the $90,000 level against the Binance Tether (USDT) market.
Bitcoin experienced a short-term recovery immediately after the US interest rate cut announcement. Subsequently, volatility increased, and the cryptocurrency failed to maintain a stable position above the $90,000 mark.
Analysis of Bitcoin's Decline
The decline in Bitcoin's price is likely attributable to the messages conveyed by the Fed and its chairman, Jerome Powell. These communications heightened uncertainty surrounding future interest rate policies in 2026, diminishing investor enthusiasm for further easing.
Furthermore, the Fed's projection of only one additional rate cut in 2026, falling short of market expectations for two to three cuts, also contributed to the downturn.
Expert Opinions on Market Dynamics
Greg Magadini, Amberdata's director of derivatives, commented on the situation, stating, "The Fed is divided, and the market has no real prediction of the future trajectory of interest rates until May 2026, when Chairman Jerome Powell is expected to leave office. A Trump loyalist (who would aggressively try to lower interest rates) replacing Powell would likely be the most reliable signal for interest rates. But that's still six months away."
Shiliang Tang, managing partner at Monarq Asset Management, observed that Bitcoin was moving downwards, mirroring the performance of the stock market.
Tang elaborated, "Bitcoin and cryptocurrency markets initially showed an upward trend following the news of a rate cut from the Fed, but have since steadily declined in parallel with stock market futures, and BTC tested the local peak of $94,000 for the third time in two weeks but failed to break through."