Bitcoin saw an electrifying session last night, soaring above $94,000 before quickly dropping back down. The Fed had just announced a 0.25% rate cut, but it was Jerome Powell’s conference that triggered the storm: a message mixing concerns about employment and firmness on inflation. As a result, BTC hovers around $90,000, down 2.5% in 24 hours, while Ethereum remains above $3,100 despite a nearly 4% drop.
A Cautious Fed Despite an Initial Monetary Move
Powell emphasized that monetary policy is now in a ‘plausible neutrality range,’ leaving the door open for a pause. ‘We are well positioned to wait and see,’ he stressed, noting that upcoming macro data before the January meeting will dictate the future.
Another surprise was the announcement by the New York Fed of $40 billion in T-bills and Treasuries purchases up to 3 years, a measure aimed at easing financial conditions without restarting a full QE cycle. Powell warns that these purchases will remain ‘significant’ for a few months, turning the page on three years of balance sheet reduction.
Analysts Highlight a Close Decision
According to Daniela Hathorn from Capital.com, the Fed clearly indicated that this cut does not mark the beginning of an aggressive easing cycle. Officials favor a gradual approach, in a context of post-shutdown data still irregular.
At Fitch Ratings, Brian Coulton notes that two FOMC members voted to maintain the status quo, a sign of a tough trade-off facing slightly rising underlying inflation. The economist no longer anticipates more than two additional cuts by June 2026, which would bring the ceiling rate to 3.25%.
On the crypto side, David Hernandez (21Shares) sums up the tightrope walk: between the signal of a possible pause and the partial resumption of Treasuries purchases, Powell is trying to reconcile the central bank’s dual mandates.
BTC Still Stuck Below $94,500, but ETFs Could Change the Game
According to Hernandez, to break out of its range, bitcoin must absorb the selling pressure concentrated below $94,500. A level at which Wednesday’s rally precisely stalled. The key could come from inflows into Bitcoin spot ETFs. With the lower cost of capital, these products could become a demand driver once again. If the flows pick up speed, he warns, it’s the ‘spark’ that could propel BTC to reclaim the psychological threshold of $100,000.
