Bitcoin extended its losses to around $107,000 after the U.S. Federal Reserve announced a widely expected 0.25% rate cut and confirmed plans to end quantitative tightening (QT). The move, which typically favors risk assets like Bitcoin, failed to lift sentiment as traders focused on deeper economic headwinds — from softening jobs data to persistent inflation pressures.
Bitcoin Drops Despite Dovish Fed Tone
Bitcoin’s sell-off accelerated just hours after the Fed delivered a quarter-point rate cut, bringing the benchmark interest rate down by 25 basis points. The world’s largest cryptocurrency, which rallied to $116,400 earlier in the week, has since fallen nearly 8% — defying expectations that easier monetary policy would spark a relief rally.
Analysts say the muted response reflects traders’ focus on broader economic uncertainty rather than the rate cut itself. “Markets were prepared for a dovish move,” one strategist told Cointelegraph. “But with job layoffs rising and growth cooling, risk appetite remains fragile — even with lower rates.”
Traders Look Beyond Rate Cuts
While the Fed’s latest “dot plot” projects at least three additional cuts in 2025, Goldman Sachs analysts expect two more reductions by mid-2026, which could bring rates into the 3–3.25% range. Yet, instead of fueling optimism, the outlook has traders asking: what comes next?
Crypto markets appear to be pricing in deeper macroeconomic risks — including President Trump’s ongoing tariff standoff with China, concerns of an AI sector bubble, and a cooling U.S. labor market. “The question now is not how many cuts, but what kind of economy those cuts are responding to,” said a Hyblock analyst.
Historical Patterns Offer Hope for Bulls
Despite the current downturn, some analysts remain optimistic. Hyblock data shows Bitcoin historically dips immediately after Federal Open Market Committee (FOMC) announcements, only to rebound in the days that follow.
“Recent history has shown that post-FOMC dips are followed by recovery rallies,” Hyblock analysts noted. “If order books show renewed buying pressure, this could become an attractive entry point for long-term investors.”
Technical traders are closely monitoring whether Bitcoin can hold above the $105,000 support zone — a level that has repeatedly acted as a rebound point during previous rate-related sell-offs.
End of Quantitative Tightening Could Set the Stage
In addition to the rate cut, the Fed confirmed it will stop shrinking its balance sheet by December 1, officially marking the end of quantitative tightening. The move suggests policymakers are shifting to a more liquidity-friendly stance, which historically benefits high-risk assets like cryptocurrencies.
However, market participants remain cautious. “Ending QT is bullish for liquidity, but sentiment is still weak,” said an independent trader. “Until we see confidence return across risk markets, Bitcoin will struggle to regain momentum.”
Eyes on Powell’s Comments and Economic Data Ahead
All eyes now turn to Fed Chair Jerome Powell’s press conference, where investors hope for clarity on the central bank’s outlook for inflation and economic growth. His comments are expected to shape Bitcoin’s short-term trajectory more than the rate cut itself — which markets had fully priced in.
Meanwhile, traders will monitor upcoming job and inflation reports for signs of economic stabilization. Any indication that the Fed might accelerate its easing cycle could trigger renewed buying in Bitcoin and other digital assets.