Why Bitcoin fell despite a rate cut
Loosening policy typically helps risk assets like Bitcoin, yet on Wednesday, most cryptocurrencies were down and about. Here are some of the factors that led to the fall. Firstly, the rate cut and end of QT were fully priced in, so there was no surprise to fuel a rally. The tone from the Fed chairman Powell was cautious, not dovish, with markets focusing on his ‘not a foregone conclusion’ line on December cuts. Macro factors like job market softness, tariff headwinds, AI-bubble concerns are weighing on sentiment and overshadowing the policy change.
What did Jerome Powell say
The Federal Reserve trimmed its federal funds target by 0.25 percentage point, moving the range to 3.75 %–4.00 %. In its statement, it flagged slower job gains, slightly elevated inflation, and noted that ‘downside risks to employment have risen’.
Alongside the rate cut, the Fed confirmed it will cease shrinking its roughly $6.6 trillion balance sheet from December 1, meaning QT ends and the bank will begin rolling over maturing Treasuries rather than letting them run off. Despite the easing move, Chair Jerome Powell also cautioned that a further rate cut in December is not guaranteed, which is a clear message that policy is no longer on autopilot.
As caution sets in, traders will have to be wary of whether the current dip marks an entry point or the start of a deeper pullback if macro risk intensifies.