CITIZENS NEWS

Bitcoin's rollercoaster ride: Fed rate cut sparks volatility as Powell signals caution

By kevinhughes // 2025-11-03

• BTC fell sharply to $109,200 despite the Federal Reserve's anticipated 0.25 percent rate cut and confirmation of ending quantitative tightening (QT) by December. Traders had priced in dovish policy, but Chair Jerome Powell's cautious remarks about future cuts triggered further declines.
• The Fed cut rates amid slowing economic indicators (rising unemployment, persistent inflation above two percent), but Powell's reluctance to commit to further cuts injected uncertainty. Markets adjusted expectations, lowering December rate-cut odds from 90 percent to 71 percent.
• Broader economic concerns include President Donald Trump's tariffs (fueling inflation), AI-driven stock volatility and potential government shutdowns. Analysts warn BTC's near-term trajectory depends on upcoming macroeconomic data, with key resistance at 110,700 and support at 105,400.
• Powell confirmed QT (draining $1 trillion in liquidity since 2022) will end by December, which historically benefits risk assets like BTC. However, policy remains data-dependent, leaving markets uncertain about future liquidity conditions.
• BTC has historically reacted sharply to Fed shifts (e.g., 2020's crash and recovery). While short-term turbulence persists, institutional demand, ETF inflows and regulatory improvements could support long-term gains—but downside risks remain if BTC breaches $100K support.

Bitcoin (BTC) experienced sharp volatility this week, tumbling to $109,200 despite the Federal Reserve's widely anticipated 0.25 percent interest rate cut and confirmation that quantitative tightening (QT) will end by December. The cryptocurrency's price action defied expectations, as traders had largely priced in the Fed's dovish move—only for BTC to slide further when Chair Jerome Powell signaled that additional rate cuts in December were "not a foregone conclusion." According to BrightU.AI's Enoch, an interest rate cut refers to a reduction in the base interest rate set by a central bank. This rate influences the cost of borrowing for both consumers and businesses. It is a monetary policy tool used by central banks to stimulate economic growth by making borrowing cheaper. It's a key mechanism for influencing economic activity and achieving a central bank's mandated objectives, typically a stable inflation rate and maximum sustainable employment. On Wednesday, Oct. 29, the Federal Reserve reduced its benchmark interest rate by 25 basis points to a range of 3.75–4 percent, marking its second cut this year after a September adjustment. The decision came amid slowing economic indicators, including rising unemployment (now at 4.3 percent, a four-year high) and persistent inflation hovering above the Fed's 2 percent target. Despite the rate cut, Bitcoin—which had rallied to 116,400 earlier in the week—plunged below 109,000 before stabilizing near $111,000. Analysts attributed the drop to Powell's cautious tone during his press conference, where he emphasized that future cuts remain uncertain. "Today's decision to drop the federal funds rate another 25 basis points was highly anticipated," said Gerry O'Shea, head of global market insights at crypto asset manager Hashdex. "Bitcoin and many other digital assets responded negatively as Chair Powell commented after the meeting that an additional rate cut this year is not inevitable."

Market reaction: From optimism to caution

Prior to the Fed's announcement, traders had overwhelmingly expected a December rate cut, with CME FedWatch data showing a 90 percent probability. However, Powell's remarks caused markets to sharply recalibrate expectations—futures now price just a 71 percent chance of another cut this year. "Recent history has shown that the FOMC leads to a price drop in BTC, followed by a move up," analysts at Hyblock noted. "If price does dip post-FOMC and signs of bullish confluence emerge, such as bid-heavy orderbooks, it would likely present good opportunities for investors." Yet Bitcoin's near-term trajectory appears muddled. While some analysts anticipated that lower rates and the end of QT would boost liquidity—potentially benefiting risk assets like BTC—Powell's reluctance to commit to further easing injected fresh uncertainty. Beyond monetary policy, traders remain wary of broader economic risks, including:

• President Donald Trump's tariff policies – The ongoing trade war has introduced inflationary pressures, complicating the Fed's balancing act.
• Tech sector volatility – Questions linger over whether AI-driven stock rallies are sustainable or speculative bubbles.
• Government shutdown threat – Political gridlock could further destabilize markets.

"Investors should track upcoming macro data for cues on monetary policy," said Edul Patel, CEO of Mudrex. "BTC's immediate resistance now stands at 110,700, while support has moved down to 105,400." One silver lining for crypto bulls was Powell's confirmation that QT—the Fed's balance sheet reduction program—will conclude by December 1. Since 2022, QT has drained nearly $1 trillion in liquidity from markets by allowing Treasury and mortgage-backed securities to mature without reinvestment. Historically, Bitcoin has thrived in loose monetary conditions, and the end of QT could eventually support inflows into risk assets. However, Powell cautioned that policy remains data-dependent, leaving markets guessing.

Historical parallels: Bitcoin's Fed sensitivity

Bitcoin has historically reacted sharply to Fed policy shifts. During the emergency rate cuts of March 2020, BTC initially plunged nearly 39 percent before staging a massive recovery. This week's volatility underscores that crypto markets remain tightly correlated with macroeconomic sentiment—particularly Fed expectations. Riya Sehgal, Research Analyst at Delta Exchange, took note that the crypto–Nasdaq correlation spiked to 0.88, its highest since June, which underscores how tightly digital assets remain tethered to macro sentiment. Despite short-term turbulence, some analysts remain optimistic about Bitcoin's long-term prospects. O'Shea pointed to growing institutional demand, ETF inflows, and improving U.S. regulation as factors that could propel BTC to new highs later this year. However, Vikram Subburaj, CEO of Giottus.com, warned that traders are now eyeing 103,000–100,000 as critical support levels if downside pressure persists. The Fed's latest move highlights the precarious balancing act facing policymakers: stimulating growth without reigniting inflation. For Bitcoin, the immediate reaction suggests traders remain cautious—but if liquidity conditions improve and risk appetite returns, BTC could yet reclaim its bullish momentum. For now, all eyes remain on Powell's next move—and whether the Fed's December meeting brings another surprise. Watch the video below about Bitcoin hitting new all-time high above $120,000. This video is from the newsplusglobe channel on Brighteon.com. Sources include: Cointelegraph.com BrightU.ai Decrypt.co BitcoinMagazine.com TheEconomicTimes.indiatimes.com Brighteon.com

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