Bitcoin surged above $94,000 and then retreated quickly as Fed Chairman Jerome Powell sounded both dovish and hawkish after the central bank delivered a 25 basis point rate cut on Wednesday.
BTC hovered around $92,000 for most of the day and rose to $94,400 as Powell – at his post-meeting press conference – underlined the risk of a possibly weaker-than-expected labor market before giving back most of the gains after saying the battle against hyperinflation is far from over.
Recently, BTC changed hands at $93,500, up 0.5% over the last 24 hours. Ether extended its recent streak of relative strength, trading above $3,400 and up about 2.4% over the same period.
Fed policy, Powell said at his post-meeting news conference, is now “within a range of plausible estimates of neutral, leaving us well positioned to determine the extent and timing of further adjustments.”
“We are well positioned to wait and see [about further rate cuts]” he added.
Powell acknowledged that there will be “a lot of data” before the Fed’s next meeting in January that will affect how the central bank moves forward.
Along with the Fed’s earlier decision to cut its Fed Funds rate range by 25 basis points, the New York Fed announced it will begin buying short-term Treasuries and Treasuries with remaining maturities of up to 3 years if needed, targeting about $40 billion in purchases over the next month starting on Friday — a move aimed at full financial conditions. quantitative easing cycle.
Powell said purchases will remain “elevated” for a few months.
This marks a change from the past three years, when the central bank reduced its balance sheet after the rapid expansion during the pandemic years.
Analyst takes
“The Fed made it clear that this cut does not mark the start of an aggressive easing cycle, emphasizing the fact that future moves will depend heavily on incoming inflation and labor market data,” Daniela Hathorn, senior market analyst at brokerage Capital.com, said in a note.
“While policymakers agreed on the need to ease modestly amid patchy post-shutdown data and signs of waning momentum, the updated communication emphasized caution,” she added.
“The fact that two FOMC members voted for no change in rates shows that this was a close call, complicated by a lack of complete data,” said Brian Coulton, chief economist at Fitch Ratings. The relatively mild increase in core inflation in recent months has probably influenced the committee to believe that another reduction – while keeping interest rates somewhat above neutral – was justified.
“It seems unlikely that rates will continue to fall at sequential meetings from here. We now expect just two more cuts in June 2026, bringing the Fed Funds rate to 3.25% (upper band),” he said.
“Between signaling a rate-cutting pause and resuming Fed purchases of US Treasuries, Powell is threading the needle between their two mandates,” noted David Hernandez, crypto investment specialist at 21Shares.
For bitcoin to break higher from its trading range, Hernandez said it needs new momentum to “overcome the concentrated short pressure” at around the $94,500 resistance zone, just where Wednesday’s burst higher hit a ceiling.
“If spot ETF inflows strengthen as expected now that the cost of capital is falling, it could be the spark that turns caution into momentum and propels Bitcoin back over the $100,000 psychological barrier,” he said.
