The Fed's interest rate cut was supposed to be the 'stimulant' for the crypto market, but what happened? Bitcoin slid directly from around 92K to below 90K, and ETH dropped by 3% as well. The entire market seemed to be doused with a bucket of cold water, falling downwards. It felt similar to the stock market's 'buy the rumor, sell the news,' but the crypto market is more sensitive, with more leverage and heightened emotions. Let me break down why this happened; this is purely real-time observation, so don't take it as investment advice.
First, let's state the facts: an interest rate cut is favorable, but the market expected too much. Today (December 11, 2025), the Fed cut by 25 basis points, which is the third time in 2025, bringing the benchmark interest rate down to 3.50%-3.75%. Theoretically, this is super friendly for crypto: low interest rates = more money = risk assets thrive. With a weaker dollar, BTC/ETH, the 'digital gold,' becomes even more attractive, as people rush out of bank deposits to invest in high-yield assets. Previously, the market was pricing in over 89% probability of a rate cut, and Bitcoin even surged to around 95K, but once it was announced, it was a classic case of 'buy the rumor, sell the news'—leveraged players rushed to close positions, leading to liquidations exceeding 500 million dollars, and BTC plummeted by 2000 dollars.
Why is the crypto market unappreciative and instead acting timid alongside the stock market? Powell's speech was too 'hawkish', and there's no hope for future easing: the dot plot shows only a 50 basis point cut in 2026 (two cuts of 25bp), with significant internal disagreements—inflation is still stuck at 2.9% (above the 2% target), and while employment is soft, it hasn't collapsed. Powell said, 'Risk management, don't expect unlimited cuts', which shattered everyone's fantasy of 'unlimited QE'. The crypto market fears uncertainty the most; as soon as investors hear 'easing won't be that aggressive', they pull back. Compared to the rate cut in October, when the market also wobbled but later rebounded; this time, combined with stock market selling pressure, crypto is faring worse. Overall risk sentiment is contagious, and crypto is the first to bear the brunt: the stock market, including the Dow and Nasdaq, has declined (Nasdaq down -1.5%) because U.S. Treasury yields have risen against the trend to 4.16%, causing funds to cling to cash for safety. Crypto is too tightly bound to risk assets, with BTC/ETH/SOL all in the red, and DeFi and AI tokens leading the decline. On X, everyone is complaining about the 'sell the news' day; after the leverage unwound, the support level of 88K-84K is in sight. Institutions like MicroStrategy just bought over 10,000 BTC (960 million dollars), and SpaceX also adjusted some positions, but it couldn't stop retail panic.
Macroeconomic noise is intensifying, marking the 'fragile period' for crypto: the crypto market was originally a rollercoaster in 2025—rising sharply in the first half, then crashing with 1.9 billion dollars in liquidations in the second half. Adding Trump's tariffs, inflation rebound, and geopolitical issues, the market is torn between 'soft landing or hard landing'. The Fed is also expanding its balance sheet by 40 billion every month to buy government bonds, which should promote liquidity, but the short-term signals are too chaotic, making everyone prefer to wait and see. bankrate.com +1 So what to do next? Short-term pitfalls, mid-term opportunities? In the short term, BTC may fluctuate around 90K, testing the support at 88K; if employment data remains stable (next week's non-farm payrolls are key), along with the Christmas 'Santa rally' effect, hitting 100K by the end of the year isn't a dream. Analyst van de Poppe says this rate cut isn't as insignificant as in October; institutional consolidation and ETF inflows will help propel the market. There are also voices on X saying '25bps is a bull market signal, Fed's balance sheet expansion is positive'—but we need to wait for the panic to subside. Overall, this drop in the crypto market isn't due to bad rate cuts, but rather a 'expectation gap + contagion effect'. A low interest rate cycle is generally favorable for BTC as a hedge, but don't rush to go all in; keep an eye on liquidity data and personnel changes at the Trump Fed (Hassett might be promoted, more dovish?).$BTC
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