Bitcoin dropped to $109,000 after Federal Reserve chair Jerome Powell said that there may be no additional rate cuts in December. Bitcoin’s price is now near $111,000 since then.
This drop occurred shortly after central banks reduced its benchmark interest rate by 0.25 percentage points to a target range of 3.75%–4%.
The cut — the Fed’s second of 2025 after a move in September — ended a long stretch of rate holds. It is hoped that the policy will lower borrowing rates and boost economic activity. Powell’s comment that additional cuts this year aren’t guaranteed sparked a selling spree across all risk assets.
Bitcoin briefly dropped below $111,000 on early Tuesday morning, before the announcement. After the announcement, Bitcoin briefly surged in price before falling again when Powell spoke. Bitcoin Magazine Pro says that it is trading at around $111,200.
During the press conference, as Jerome Powell said that December’s rate cuts aren’t guaranteed, Bitcoin’s price immediately reacted — plunging to $109,000 in a sharp red candle before quickly recovering. Crypto markets across the board reacted in a similar way.
Powell stated that the inflation rate excluding tariffs was a measure of inflation. “not so far” The central bank has emphasized the importance of policymakers’ achieving the 2% goal. “not made a decision about December.” Powell noted that officials had held “strongly differing views” Today’s meeting is a good example.
Markets have sharply reduced their expectations that another rate cut will be made this year after his remarks. Fed funds futures are now pricing a 71% probability of a rate cut in December, down from 90% earlier that day.
As traders assessed the Fed’s near-term course, two-year Treasury rates jumped nine basis points.
Bitcoin’s response to changes in monetary policy has been historically strong. Bitcoin dropped nearly 39% after the Fed made emergency cuts in March of 2020 before recovering. When the Fed cut in September 2025, market reaction was limited — suggesting expectations were already priced in.
Fed announces end to Quantitative Tightening
Powell confirmed that Quantitative tightening will be ending by the Fed’s December deadline. It’s a good thing. involves Let some Treasuries, mortgage securities and other investments mature rather than investing the principal.
QT decreases liquidity through the Fed shrinking its balance sheet by allowing the government bonds to reach maturity without being reinvested or selling them on the market.
As part of the fight against inflation, this process began in 2022.
Ending QT would stop that drain on liquidity — a shift many analysts believe could eventually support flows into risk assets, including Bitcoin.
Powell, however, warned that Powell’s policy would remain dependent on the economic data and add further uncertainty to expectations in the market.
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Source: bitcoinmagazine.com
