Bitcoin fell below $100,000 as part of a larger downturn in speculative investments, following the Federal Reserve’s announcement that indicated a more cautious approach concerning future interest rate cuts.
The cryptocurrency dipped by about 1% to $99,800 as of 10 a.m. Thursday in Singapore. This decline came after a significant drop of 5.1% on Wednesday, which marked its largest decrease since September. Other cryptocurrencies like Ether, XRP, and the popular meme token Dogecoin also encountered challenges.
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Fed officials have cut borrowing costs for the third consecutive time but have limited the number of anticipated cuts for 2025. Chair Jerome Powell emphasized that additional progress on inflation is required before any further rate cuts can be contemplated.
The outcomes of the Fed meeting were not surprising for investors monitoring recent trends in US inflation and economic activity, according to IG Australia Pty Market Analyst Tony Sycamore in a recent statement. “However, it served as a trigger to eliminate some speculative excesses that had entered risk assets, including stocks and Bitcoin, following the US election,” he remarked.
The Fed’s decision strengthened the dollar while negatively impacting global stocks and bonds. Additionally, a dispute over a funding bill heightened anxiety, increasing the risk of a partial US government shutdown. US equity futures displayed mixed results on Thursday.
Despite the recent volatility, Bitcoin has experienced a 50% surge since the election on November 5, reaching an all-time high of $108,316 earlier this week, fueled by President-elect Donald Trump’s promise to eliminate regulatory barriers for crypto in the US. The Republican also advocated for the establishment of a national strategic reserve for the leading digital asset.
“All signs point to a strong foundation and positive outlook for Bitcoin,” even though some traders appeared disappointed by the Fed meeting and opted to take profits, stated Paul Veradittakit, managing partner at Pantera Capital.
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Trump’s backing of cryptocurrency has eclipsed concerns regarding inflated momentum and the lack of traditional valuation metrics. The outgoing administration of President Joe Biden imposed restrictions on the industry following a major market downturn in 2022, which exposed risky practices and fraudulent activities.
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