Crypto Slips as Fed Rate Cut Fails to Ignite Market Momentum
Cryptocurrency markets displayed a lack of enthusiasm following the US Federal Reserve’s recent rate cut, as leading tokens Bitcoin and Ethereum continued their downward trend on Thursday. On Wednesday, December 10, Federal Reserve Chair Jerome Powell revealed a quarter-point reduction in the key interest rate, marking the third consecutive cut, and indicated that rates might stay steady in the upcoming months. The adjustment has lowered the benchmark rate to approximately 3.6 percent, marking its lowest point in almost three years. Despite a brief rally in equities, the momentum did not translate into gains for digital assets. Altcoins mirrored Bitcoin’s downturn. Select narratives, such as Hyperlink and Monero, have shown only limited upside while absorbing the modest amount of risk capital that is available.
As of the latest update, Bitcoin is priced at $92,662, reflecting a decline of 2.76 percent in the last 24 hours, with a trading volume recorded at $70.48 billion. The token fluctuated between $89,459 and $94,477 throughout the session, as reported. Ethereum followed suit, experiencing a decline of approximately 3.56 per cent, trading at $3,200. The 24-hour trading volumes reached $34 billion, with prices oscillating between $3,170 and $3,446. Market analysts characterized the development as a mixed catalyst, rather than a definitive reflationary push. They highlighted policymakers’ cautious approach, noting that Powell combined a dovish message with hawkish concerns about inflation. “The Fed’s 25 bps cut is a mixed catalyst rather than a clean reflationary shove. Policymakers signalled caution: two votes against easing, one for a 50 bps move, and Fed Chair Powell’s press conference threaded a dovish message with hawkish inflation concern,” said Vikram Subburaj. He noted that the intraday surge past $94,400 followed by a swift pullback to the low $90,000 suggests a market eager to respond to news but lacking substantial support. Bid-ask liquidity, spot CVD, and on-chain activity continue to show signs of weakness. The rally that began in late November has been characterized by spot-led movements, accompanied by a decline in open interest and leverage. “This indicates that the upward movement is genuine, yet limited. Until concentrated short pressure around the $94,500 zone is absorbed and ETF flows shift from sporadic to sustained, expect BTC to oscillate below the $100K threshold rather than run away,” he said.
As BTC remains range bound, it appears that smaller catalyst-driven tokens could see temporary outperformance. However, the same structural challenges remain, such as thin order books, cautious derivatives positioning, and erratic ETF behavior. “So, any alt-season will likely be episodic and event-driven rather than a sustained rotation unless spot demand and institutional inflows broaden significantly,” Subburaj stated. Subburaj indicated that actionable levels for investors include dips toward the $90,000 zone for staggered entries, along with a confirmed close above $94,500 before anticipating follow-through on the upside. “Keep leverage minimal until ETF demand turns consistently positive,” he advised. Riya Sehgal noted that BTC’s inability to reclaim $94,000 indicates a decline in bullish momentum. “Bitcoin’s support lies at $89,500 to $87,500. ETH’s break below the $3,240 trendline support raises the risk of a slide toward $3,150,” she said.
That said, the regulatory sentiment also exhibited a mixed outlook. The OCC discovered that nine prominent U.S. banks, such as JPMorgan and Citi, imposed restrictions on crypto businesses from 2020 to 2023, which could lead to a review by the Justice Department. Japan’s FSA has put forth a proposal to transition the oversight of crypto from payments to securities law, recognizing the investment characteristics of digital assets. In the latest development, MicroStrategy has voiced its opposition to MSCI’s initiative to exclude crypto-heavy firms from its indexes, labeling the decision as discriminatory. In a noteworthy advancement, Gemini has obtained CFTC approval to initiate a prediction market, signifying a significant move towards wider institutional acceptance of crypto-linked derivatives.
