Bitcoin Price Struggles After Fed’s Hawkish Remarks and Rate Cut

Bitcoin (BTC) witnessed a notable drop this week, briefly dipping below the crucial $100,000 threshold. The sudden price dip came in response to the Federal Reserve’s 25-basis-point rate cut and more conservative expectations for future rate reductions in 2025.

Fed Rate Cut and Hawkish Tone Impact Bitcoin

On Thursday, Bitcoin experienced a nearly 3% decrease, hitting an intraday low of $98,792 before recovering somewhat to stabilize around $101,740. The primary catalyst for the sharp price decline was the Federal Reserve’s announcement, which caught many in the market off guard.

In his remarks, Fed Chair Jerome Powell expressed a strong stance against the idea of a Strategic Bitcoin Reserve. Responding to speculation regarding the U.S. government’s potential stockpiling of Bitcoin, Powell clarified, “We’re not allowed to own Bitcoin,” emphasizing that any such initiative would require Congressional approval. This statement signaled the Fed’s neutrality on digital assets, a sentiment that likely dampened investor sentiment and contributed to Bitcoin’s volatility.

The U.S. Strategic Bitcoin Reserve Proposal

The idea of a U.S. Strategic Bitcoin Reserve gained significant attention after President-elect Donald Trump proposed it. The proposal suggested the reserve could include 200,000 BTC tokens, worth an estimated $21 billion at current prices. However, Powell’s dismissive comments about the possibility of the Fed backing such an initiative sapped investor enthusiasm. While Powell acknowledged the proposal, he clarified that it would be up to lawmakers in Congress, not the Federal Reserve, to decide on any Bitcoin stockpiling plans.

Market Impact: Fed Signals and Bitcoin’s Future

Bitcoin’s recent volatility can be attributed to a mixture of factors. First, there is the uncertainty surrounding the Fed’s policies, with Powell’s hawkish tone signaling potential economic tightness ahead. Second, speculation about U.S. fiscal and crypto policies under the incoming administration further complicates the outlook. Despite these headwinds, Bitcoin has had an impressive year, more than doubling its value thanks to growing institutional adoption and optimism about pro-crypto policies.

Bitcoin Price Technical Analysis

From a technical standpoint, Bitcoin remains under pressure as it continues to consolidate below the $104,252 50-day exponential moving average (EMA). Immediate resistance for the cryptocurrency is seen at $103,410, with further hurdles at $105,723 and $108,280. On the downside, Bitcoin faces support at $101,147, and key levels to watch for a potential drop are $98,656 and $96,482.

The Relative Strength Index (RSI) currently sits at 44, indicating a slight bearish momentum, though it suggests the potential for stabilization should Bitcoin maintain support above the $101,000 mark.

Key Takeaways:

• Bitcoin briefly tested support around $101,147 following hawkish comments from the Federal Reserve.
• Powell dismissed speculation about a central bank-backed Bitcoin reserve, dampening market optimism.
• Bitcoin’s immediate resistance lies at $103,410, with the RSI suggesting caution before any upward momentum.

While Bitcoin faces short-term challenges, the long-term outlook for digital assets continues to hinge on broader regulatory clarity and growing institutional adoption. Investors will be closely watching future Fed decisions and U.S. policy changes as key factors driving Bitcoin’s price trajectory.