Bitcoin briefly dipped below the $100,000 mark following Federal Reserve Chair Jerome Powell’s recent comments on monetary policy and the central bank’s stance on digital assets. The move came amid broader market reactions to the Fed’s updated economic projections, which signaled a more cautious approach to interest rate cuts in 2025.
Market Reaction to Fed Policy Signals
Bitcoin tumbled nearly 3%, briefly falling below $100,000 to an intraday low of $98,792, after the Federal Reserve announced a widely expected 25-basis-point rate cut but projected only two additional quarter-point reductions in 2025—fewer than the three or four cuts many investors had priced in. This more restrained outlook on monetary easing triggered a wave of risk-off sentiment across financial markets.
At the time of writing, Bitcoin was trading around $100,750, reflecting a 3% decline. The pullback followed Powell’s press conference, where he emphasized the Fed’s data-dependent approach and reiterated that future rate decisions would be guided by inflation and labor market trends.
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Powell’s Stance on Bitcoin and Central Bank Reserves
In a notable comment, Powell explicitly ruled out any possibility of the Federal Reserve holding Bitcoin as part of its reserves. “We’re not allowed to own Bitcoin,” he stated. “That’s the kind of thing for Congress to consider, but we are not looking for a law change at the Fed.”
This clarification dampened speculation that central banks might begin diversifying into digital assets. While some investors had hoped for a more open regulatory posture, Powell’s remarks reinforced the current institutional distance between traditional monetary authorities and cryptocurrencies.
Market analysts interpreted the comments as a reminder that despite growing mainstream adoption, Bitcoin remains outside the formal financial reserve system—for now.
Derivative Liquidations and Investor Sentiment
The shift in market sentiment triggered over $850 million in derivative liquidations across major crypto exchanges. Long positions were particularly hard hit, as leveraged traders reacted to the sudden volatility.
Dul Patel, CEO of crypto investment platform Mudrex, noted: “Bitcoin saw a dip following Jerome Powell’s hawkish remarks on the Federal Reserve’s stance against owning Bitcoin.” He added that while macroeconomic factors dominate short-term price action, long-term fundamentals remain strong.
Vikram Subburaj, CEO of Giottus, echoed this sentiment: “Bitcoin experienced a significant pullback post-hawkish commentary from the US Fed. Despite the 25bps interest rate cut, the guidance of only two cuts in 2025 dampened market optimism, triggering a sharp correction across crypto.”
Technical Outlook: Support Levels and Consolidation
According to the ZebPay trade desk, Bitcoin formed a ‘Doji’ candle near its recent high of $108,353—an indicator often interpreted as market indecision and a potential reversal signal. This pattern preceded the current correction.
Key support levels are now seen at $100,000 and $90,000. If Bitcoin holds above $98,000, analysts suggest the asset may enter a consolidation phase before resuming its upward trajectory. Volatility is expected to remain elevated as markets digest the Fed’s updated economic projections.
Bitcoin’s market capitalization slipped to $2 trillion within the last 24 hours, with a dominance of 57.01%, according to CoinMarketCap. Trading volume surged by 34.8% to $98.56 billion during the same period, underscoring strong investor engagement despite the correction.
Broader Cryptocurrency Market Impact
The sell-off extended beyond Bitcoin, affecting major altcoins across the board:
- Ethereum (ETH): Down 4.8% to $3,656
- XRP: Fell 6.3%
- BNB: Dropped 1.1%
- Solana (SOL): Lost 4%
- Dogecoin (DOGE): Declined 6%
- Cardano (ADA): Down 4.2%
- Tron (TRX): Slipped 3.7%
- Avalanche (AVAX): Plunged 8.3%
- Chainlink (LINK): Tumbled 10%
- Shiba Inu (SHIB): Dropped 6%
The broad-based decline highlights the continued correlation between Bitcoin and the wider crypto market, especially during macro-driven sell-offs.
Year-to-Date Performance and Drivers
Despite the recent pullback, Bitcoin has more than doubled in value year-to-date, surpassing $100,000 for the first time in early 2025. This rally has been fueled by several key factors:
- Growing institutional adoption
- Spot Bitcoin ETF approvals in the U.S.
- Anticipation of reduced regulatory hostility under new political leadership
- Macroeconomic expectations of lower interest rates and quantitative easing
While Powell’s comments tempered near-term enthusiasm, long-term bullish drivers remain intact.
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Frequently Asked Questions (FAQ)
Q: Why did Bitcoin drop below $100,000?
A: The drop followed Federal Reserve Chair Jerome Powell’s remarks indicating fewer rate cuts in 2025 than expected, along with his statement that the Fed has no interest in holding Bitcoin. This led to risk-off sentiment and derivative liquidations.
Q: Is the Fed planning to buy Bitcoin?
A: No. Powell clearly stated that the Federal Reserve is not allowed to own Bitcoin and is not seeking any legal changes to enable such holdings.
Q: What are the key support levels for Bitcoin?
A: Major support is expected at $100,000 and $90,000. If these levels hold, Bitcoin may consolidate before attempting another breakout.
Q: How did other cryptocurrencies react?
A: Most major altcoins declined in tandem with Bitcoin, with losses ranging from 1% to over 10%, reflecting strong market correlation during macro-driven movements.
Q: Was the Fed’s rate cut unexpected?
A: No—the 25-basis-point cut was widely anticipated. However, the projection of only two more cuts in 2025 was more dovish than markets had hoped, leading to disappointment.
Q: What’s next for Bitcoin in 2025?
A: Analysts expect volatility to continue as macro conditions evolve. Long-term outlook remains positive due to ETF inflows, halving effects, and growing adoption.
Final Thoughts
Bitcoin’s brief dip below $100,000 underscores the growing influence of macroeconomic policy on digital asset markets. While short-term price action remains sensitive to central bank signals, the long-term trajectory continues to be shaped by adoption trends, regulatory clarity, and technological evolution.
As investors navigate this new phase of crypto maturity, staying informed about both on-chain metrics and macro developments will be crucial.
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