BTC Dips Below $90K Despite Fed Rate Cut Boost

While macroeconomic uncertainties weigh on this year’s end, every move of the Federal Reserve is closely watched. Last Wednesday, the Fed cut its rates for the third consecutive time, causing an immediate reaction in the crypto market. Bitcoin jumped beyond 93,000 dollars, driven by a renewed appetite for risk. This unexpected rebound, against the backdrop of looser monetary policy, raises as many expectations as doubts.

A crypto rebound aligned with the Fed’s mechanics

The Fed confirmed on Wednesday a third rate cut in three months, bringing the total reductions to 0.75 % since September.

This decision, although anticipated, immediately triggered a reaction on the crypto market. Bitcoin went from under $90,000 to a peak of $93,500 on Coinbase, before slightly retreating to $92,300.

According to Santiment’s analysis, this dynamic fits a well-known pattern. “Each rate cut has led to short-term sell-offs, following the classic buy the rumor, sell the news pattern,” the on-chain firm states.

However, this behavior is only temporary. Santiment explains : “there is usually a rebound once the dust has settled,” adding that this stabilization phase “can offer predictable trading opportunities.”

This phenomenon fits into an overall economic logic, regularly observed after Fed decisions. Here are the key elements highlighted by analysts :

• Rate cuts encourage increased risk appetite due to lower financing costs ;

• Investors seek higher yields, pushing them toward speculative assets like cryptos ;

• Each rate cut was followed by a short-term pullback, then a more moderate but predictable rebound, according to historical data analyzed by Santiment ;

• The bitcoin uptrend remains fragile but could enter a consolidation cycle if market sentiment stabilizes in the coming days.

Optimism called into question as bitcoin falls back below $90,000

While some observers hoped for a lasting rebound after the Fed rate cut, markets sharply reminded of their volatility.

This Friday, bitcoin fell back below $90,000, completely erasing the gains made after Wednesday’s announcement. This drop temporarily invalidates the bullish scenario anticipated by some traders and revives doubts about the strength of market sentiment.

As Jeff Ko, chief analyst at CoinEx, pointed out, the rate cut was “widely expected and already priced in.” So it was more subtle signals from the Fed, notably its dot plot, that attracted attention. It “slightly tilted towards monetary tightening,” according to Ko, which likely cooled investor bullish enthusiasm.

Moreover, the $40 billion in short-term Treasury purchases announced by the Fed were interpreted as a technical measure rather than real monetary support. Jeff Ko emphasizes: it is not a massive stimulus plan, but “a technical maneuver designed to inject short-term liquidity to adjust short-term rates.”

Nevertheless, part of the market had seen this as a positive signal, which in the short term supported U.S. stocks… and briefly bitcoin. The fall back below $90,000 shows this perceived support was more fragile than it appeared.

In this more uncertain context, Jurrien Timmer, global macro strategy director at Fidelity Investments, calls for perspective. He acknowledges bitcoin underperformed stocks this year but sees a more reassuring underlying dynamic : “the network structure is stabilizing, and the market is becoming more mature than in previous cycles.”

If Fed signals sustain hope for monetary support, the market’s reaction highlights a more nuanced reality. The bitcoin price, subject to conflicting forces, swings between speculative resurgence and structural uncertainty, reflecting a market still searching for durable benchmarks.