Bitcoin Falls Below $100k Following Hawkish FOMC Despite 25bp Rate Cut

Dogecoin (DOGE) registered the worst performance among the top 10 after an 11% correction brought the price down to a low of $0.348. The US stock market also reacted negatively to Powell’s remarks. The S&P 500 closed with a 1.55% drawdown, while the Nasdaq 100 shrunk by 2%.  Coinbase’s COIN stock closed at a 6.6% loss, while MicroStrategy’s MSTR corrected 5.7%.

Powell signaled that the policy rate can now be more cautious following the recent cuts, adding that the decision to move slower reflects higher inflation expectations and a path of uncertainty ahead.  Additionally, he said that any potential rate cuts in 2025 will depend on the market data next year.

The London Stock Exchange revealed that US rate futures are pricing in just two rate cuts next year. Meanwhile, rates futures markets now expect 37 basis points of cuts in 2025, compared to the previous expectation of 49 basis points. Odds at the prediction market Kalshi are 90% toward no rate cuts in January 2025.

Nevertheless, Powell stated he is optimistic about the next year, adding:  It’s in a really good place, our policy is in a really good place (and) I expect another good year next year.” 

The Fed chair was also questioned about the heightened interest in the US setting up a Bitcoin Strategic Reserve. He answered that the Fed is not allowed to own Bitcoin, and this is a matter for Congress to consider. Powell then added: “But we are not looking for a law change at the Fed.”