On Wednesday afternoon, Bitcoin’s price experienced a significant decline, reaching $109,000 after Federal Reserve Chair Jerome Powell indicated that additional rate cuts may not be forthcoming in December. Following this dip, Bitcoin’s price stabilized around $111,000.

This price drop occurred shortly after the Federal Reserve announced a reduction in its benchmark interest rate by 0.25 percentage points, establishing a target range of 3.75%–4%.

This cut represents the Fed’s second reduction in 2025, following a similar move in September, and marks the conclusion of an extended period of rate holds. The decision aims to lower borrowing costs and stimulate economic activity; however, Powell’s assertion that further cuts are not guaranteed for the remainder of the year incited selling in various risk assets.

During the press conference, Bitcoin’s price responded promptly to Powell’s remarks regarding the uncertainty of December’s rate cuts. The cryptocurrency experienced a sharp decline to $109,000 before swiftly recovering, a trend that was mirrored across the broader cryptocurrency market.

Powell noted that inflation, excluding the effects of tariffs, is “not so far” from the central bank’s 2% target, yet emphasized that policymakers had “not made a decision regarding December.” He acknowledged the presence of “strongly differing views” among officials during the meeting.

Following Powell’s statements, market expectations for an additional rate cut this year diminished significantly. According to CME data and prediction markets such as Kalshi and Polymarket, the probability of a December cut has fallen from approximately 90% earlier in the day to around 71%.

In response, the two-year Treasury yield increased by 9 basis points as traders recalibrated their assessments of the Fed’s near-term trajectory.

Historically, Bitcoin has shown a tendency to react sharply to changes in monetary policy. After the Fed’s emergency cuts in March 2020, Bitcoin experienced a nearly 39% decline before recovering. Conversely, the market’s reaction to the Fed’s September 2025 cut was more subdued, suggesting that expectations were largely already priced in.

Bitcoin Prices as the Fed Signals the Conclusion of Quantitative Tightening

PoweII further indicated that the central bank is nearing the conclusion of its Quantitative Tightening (QT) program, affirming expectations that QT will cease by December. This approach entails allowing certain holdings of Treasuries and mortgage securities to mature without reinvesting the principal.

QT effectively reduces liquidity by contracting the Fed’s balance sheet, either by allowing government bonds to mature without reinvestment or through direct market sales.

However, Powell cautioned that future policy decisions will remain contingent on economic data, thereby introducing additional uncertainty into market forecasts.

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