Bitcoin Drops Below $108,000 After Fed Rate Cut and End of QT
Bitcoin reacted unexpectedly to the Federal Reserve’s latest policy move, sliding below $108,000 after a 0.25% rate cut and the formal end of quantitative tightening — decisions that usually support risk assets.
Paradoxical market response
Following the announcement, Bitcoin fell by 7.2% from its October 27 peak of $116,400 before rebounding to hover around $111,000. The move surprised many traders who anticipated a rally in response to the Fed’s pivot toward easier monetary conditions.
Analysts suggest the sell-off may reflect uncertainty about broader macroeconomic conditions and investor skepticism over how long the Fed can maintain its current stance. In recent months, Bitcoin has shown growing sensitivity to global liquidity and real-rate expectations rather than to nominal policy shifts.
Powell’s cautious tone
During the press conference, Fed Chair Jerome Powell emphasized the fragile balance facing the U.S. economy. He acknowledged that “risks to the labor market have increased,” while “inflation remains elevated.”
Powell described the rate cut as a form of “risk management,” noting that the December decision remains open. “What lies ahead is uncertain,” he said, adding that future moves will depend on incoming economic data and inflation dynamics.
Why the decline matters
Typically, lower interest rates and an end to QT (Quantitative Tightening) boost liquidity and support cryptocurrencies. This time, however, traders appear wary of the possibility that the Fed is cutting too late — signaling slower growth rather than renewed expansion.
The crypto market’s immediate reaction mirrored that of equities: brief relief followed by cautious selling. Ether fell 4%, while Bitcoin dominance edged higher as investors sought relative safety within the crypto space.
Market outlook
Despite the short-term drop, most analysts view the $110 000 zone as a healthy consolidation level after a record-setting October. Options data show increased open interest in $120 000 calls for December, suggesting traders expect volatility but not a deep correction.
Macro strategists note that the key driver for Bitcoin in Q4 will remain the pace of liquidity injection and the Fed’s communication about 2026 inflation targets. If real rates fall further, digital assets could resume their upward trajectory even amid mixed risk sentiment.
Conclusion
Bitcoin’s drop below $108 000 underscores how closely the crypto market now tracks global monetary policy. As the Fed tries to balance inflation control and economic stability, crypto traders face the same paradox as central bankers: easing helps liquidity — until it signals fear.
Editorial Team — CoinBotLab