The central bank dropped its target rate on Wednesday afternoon, in what some are calling a “hawkish cut.”
Even before Fed Chairman Jerome Powell hit the stage on Wednesday afternoon, the outcome seemed clear: a rate cut was on the way. At least that’s what the CME Fedwatch Tool indicated only minutes before Powell’s address. The algorithm, which forecasts interest rates based on futures market expectations, predicted a 25-basis-point cut, which Powell delivered. But will Bitcoin rally, or has the cut already been priced in?
Given that this week’s rate decrease was labelled “hawkish,” Bitcoin’s price may respond with a “sell the news” reaction and continue to consolidate within a range until a fresh momentum emerges.
According to CNBC, the Fed approved the rate cut on a 9-to-3 vote, indicating that members remain concerned about persistent inflation and expect future economic growth and rate cuts to decelerate by 2026.
The cryptocurrency’s response to macroeconomic conditions has been somewhat unpredictable. When ADP announced an unexpected increase in private-sector job layoffs, Bitcoin rose 2%. BTC’s recent price behaviour has been so illogical that many respected experts, like Custodia Bank CEO Caitlin Long, suspect price manipulation.
And now, despite the cut, bitcoin scarcely moved upon the announcement but has fallen below $90,000 in the morning session in Asia trading hours as at the time of writing this news. In the cryptocurrency’s defence, the rate decision was taken in the setting of a divided Federal Reserve. Although nine of the twelve members of the Federal Open Market Committee (FOMC) voted for today’s drop, the committee was divided on the future path of interest rates, prompting some to call the move a “hawkish cut.”
The agency’s cautious tone has prompted selling in the cryptocurrency market, with Bitcoin falling below $90,000. The largest cryptocurrency is down more than 3%, taking many others with it.
Ethereum is down 4%, sliding below $3,200, while XRP has also dropped over 4% as it fights to maintain the $2.00 psychological level.
According to Coinglass statistics, the move has resulted in the liquidation of multiple long positions in the market, totalling $440.2 million in the last 12 hours. Long liquidations accounted for $334.8 million, while short liquidations totalled $105 million.
