Bitcoin (BTC) experienced a significant drop, briefly falling below the psychological $100,000 level following the Federal Reserve’s announcement of a 25-basis-point rate cut. The Fed also indicated fewer rate reductions in 2025 than previously anticipated, impacting market sentiment.
Bitcoin’s Intraday Volatility
On Thursday, Bitcoin’s price fell nearly 3%, reaching an intraday low of $98,792 before recovering to stabilize around $101,740. Federal Reserve Chair Jerome Powell’s hawkish remarks further dampened investor optimism.
Key Highlights from the Fed’s Announcement:
- The Federal Reserve implemented a ‘hawkish cut,’ reducing rates by 25 basis points to 4.50%.
- Projections for 2025 suggest only a 50-basis-point reduction, bringing rates to 3.9%.
- The Fed’s cautious approach indicates a focus on maintaining economic stability.
Powell’s Position on Bitcoin
In response to speculation about a Strategic Bitcoin Reserve, Powell clarified, “We’re not allowed to own Bitcoin,” emphasizing that such a move would require Congressional approval. This statement reinforced the Fed’s neutral stance on digital assets, further tempering enthusiasm for the proposal.
Strategic Bitcoin Reserve Sparks Debate
President-elect Donald Trump’s proposal to establish a U.S. Strategic Bitcoin Reserve has generated considerable interest. The reserve, potentially comprising 200,000 seized BTC tokens worth approximately $21 billion, remains a contentious topic.
However, Powell’s cautious tone and lack of endorsement for the initiative have left investors uncertain. The central bank’s reluctance to advocate for Bitcoin accumulation shifts the decision-making responsibility to Congress.
Factors Behind Bitcoin’s Volatility
Analysts attribute Bitcoin’s recent price swings to profit-taking, hawkish Fed commentary, and uncertainties surrounding U.S. fiscal and cryptocurrency policies under the incoming administration. Despite these challenges, Bitcoin has more than doubled in value this year, driven by optimism over pro-crypto regulations and increased institutional adoption.
Technical Analysis: Bitcoin Price Outlook
Bitcoin continues to face selling pressure, consolidating below its 50-day EMA at $104,252. Key technical levels include:
- Resistance Levels: Immediate resistance is observed at $103,410, with further barriers at $105,723 and $108,280.
- Support Levels: Initial support lies at $101,147, while critical zones are identified at $98,656 and $96,482.
The Relative Strength Index (RSI) is currently at 44, indicating bearish momentum but hinting at possible stabilization in the near term.
Key Insights:
- Bitcoin tested support near $101,147 amid hawkish signals from the Fed.
- Powell dismissed the idea of a central bank-backed Bitcoin reserve.
- Resistance at $103,410 remains a challenge, with cautious market sentiment prevailing.
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