An analysis by Coinotag reported that the price of Bitcoin $BTC dropped to around $90,200, following the U.S. Federal Reserve's decision to cut interest rates by 25 basis points, which was widely anticipated in the market.
The market reacted negatively with the 'Sell the News' phenomenon, as the cryptocurrency failed to achieve any gains despite the easing signals that typically support risky assets.
Trading data from CoinGecko shows a 2% drop in Bitcoin over the past 24 hours, clearly reflecting the caution prevailing among investors. This highlights that the potential gains from reduced borrowing costs have been overshadowed by broader economic concerns, preventing the event from turning into a bullish driver.
Risks of persistent inflation:
According to the site, persistent inflation remains a major concern, as it could limit the Federal Reserve's ability to continue its monetary easing policy. The dot plot released by the Federal Reserve indicates a decline in expectations for further interest rate cuts in 2026, signaling the end of the current cycle and raising fears of rising long-term interest rates.
Tim Sun, senior researcher at HashKey Group, explains that the 2026 U.S. midterm elections could lead to a mix of financial stimulus and monetary easing under the current administration, potentially reigniting inflationary pressures. This scenario would put risky global assets like Bitcoin BTC under pressure due to its extreme sensitivity to interest rate fluctuations.
The 2026 U.S. elections are a new pressure factor on cryptocurrencies:
According to the site, the upcoming U.S. elections in 2026 add an additional layer of uncertainty, as these elections are likely to push for more flexible fiscal policies and a more lenient stance from the Federal Reserve to sustain economic growth. However, this path carries the risk of reviving inflation.
High long-term interest rates resulting from these pressures will weigh on Bitcoin, given its close correlation with interest rate movements and global risk appetite. Additionally, the AI-driven boom in capital expenditures may inflate energy and infrastructure costs, contributing to a more persistent inflationary environment.
Market expectations for Bitcoin BTC:
Prediction Markets reflect the current pessimism, showing only a 17% chance of a year-end rally (Santa Rally) in 2025. In this context, analysts suggest that Bitcoin BTC may test the support level at $69,000, more likely than its ascent to resistance at $100,000.
John Haar, managing director at Swan Bitcoin, draws attention to the recent purchases by the Federal Reserve to manage reserves worth $40 billion of T-Bills over 30 days, marking the first expansion of the balance sheet since the quantitative tightening began in mid-2022, excluding the response to the banking crisis in 2023. These developments underscore the complexity of the macroeconomic environment impacting the trajectory of Bitcoin BTC.
When can Bitcoin BTC regain its momentum?
The decline of Bitcoin BTC after the interest rate cut represents a market reaction grappling with the previously anticipated easing benefits overshadowed by persistent inflation and concerns over upcoming elections. While the U.S. Federal Reserve carefully balances these factors, investors must closely monitor macroeconomic indicators and signals from policymakers.
Looking ahead, clearer guidance on the future path of interest rates may provide the stability needed for Bitcoin BTC to regain its momentum, opening the door for strategic positioning opportunities in the evolving cryptocurrency landscape.
