The U.S. Federal Reserve delivered its second 25 basis-point rate cut of 2025 on Wednesday, as widely anticipated. However, Chair Jerome Powell’s hawkish tone during the post-meeting press conference caught markets off guard, triggering a sharp sell-off in risk assets.
Rate Cut Delivered, but December Hopes Dashed
Just minutes before Powell spoke, the CME FedWatch Tool implied a high probability of a third consecutive cut in December. But Powell stated bluntly: “A further reduction at the December meeting is not a foregone conclusion.” Bitcoin quickly plunged, briefly breaking below the $110,000 level to hit $109,800 before staging a partial recovery.
This marks a notable shift from the Fed’s previous guidance. In September, weak jobs data forced the central bank to cut rates after holding steady for most of the year, and the subsequent dot plot projected cuts extending into 2027. Powell’s latest remarks effectively tempered that optimistic trajectory.
Bitcoin Recovers Slightly, Equities Slip
At press time, Bitcoin was trading at $110,403.84, down 3.02% over 24 hours, according to CoinMarketCap. On a weekly basis, BTC still showed a 3.3% gain. The asset ranged between $109,368.72 and $113,685.54 in the past day.
Wall Street also reversed earlier gains. The Dow Jones Industrial Average shed nearly 200 points after Powell’s comments. Broad market sell-offs hit tech and crypto-related stocks, as investors recalibrated expectations for monetary easing in the coming months. Analysts warn that Powell’s cautious stance could signal a prolonged liquidity squeeze, undermining the “rate-cut premium” priced into risk assets.
Market Metrics in Focus
Twenty-four-hour trading volume surged 22% to $68.22 billion, reflecting intense volatility. Market capitalization fell 3% to $2.22 trillion. Bitcoin dominance edged down to 59.59%, a 0.65% decline from Tuesday.
Derivatives markets saw heightened stress. Open interest in Bitcoin futures slipped 0.84% to $73.94 billion, while total liquidations over 24 hours surged to $261.44 million — nearly quadrupling from the previous day. Long positions accounted for the bulk of losses at $214.29 million, while shorts lost $47.16 million. This suggests that leveraged bullish bets built on the assumption of continued rate cuts were forcibly unwound.
What to Watch Next
Powell emphasized that future policy will be data-dependent: “We’re going to be looking at the data that we have and how that affects the outlook.” Key economic releases — including the November nonfarm payrolls and CPI report — will be critical in shaping the December decision.
Following Powell’s remarks, the CME FedWatch Tool now shows the probability of a December cut falling to below 50% from 70% earlier this week. Many traders expect the Fed to hold steady if macroeconomic data continues to show resilience, waiting for more conclusive evidence that inflation is fully under control.
Overall, Wednesday’s press conference marks a pivot from the Fed’s recent dovish stance toward a more cautious “wait-and-see” mode. For the cryptocurrency market, near-term volatility may persist, but the medium-term outlook will hinge on the interplay between liquidity cycles and fundamental adoption narratives.