Bitcoin Price Pulls Back While Market Faces Fed Rate Cut Reality Check

Bitcoin price retreated sharply on Thursday following the Federal Reserve’s disappointing rate cut projections for 2025, marking a significant correction from recent highs. The broader cryptocurrency market experienced even steeper declines, with widespread liquidations and profit-taking erasing much of the post-election rally momentum.

Fed Rate Outlook Triggers Bitcoin Price Decline

The catalyst for Thursday’s market turmoil emerged from Federal Reserve Chair Jerome Powell’s comments regarding interest rate expectations. Rather than the multiple rate cuts many investors had anticipated, the Fed projected only two cuts for 2025—a considerably hawkish stance that caught markets off-guard. Bitcoin price initially attempted to stabilize above the $100,000 psychological level but could not sustain momentum, sliding toward the mid-$96,000 range during the U.S. trading session. The cryptocurrency eventually recovered modestly to around $98,000 before another selling wave pushed it below $96,000, posting a 4.8% loss over the previous 24 hours.

This pullback represents a crucial test of market psychology after months of relentless upside momentum. As Azeem Khan, co-founder and COO of layer-2 network Morph, noted: “When you zoom out and consider the year-over-year growth, a pullback like this feels healthy.” Khan suggested that typical year-end tax-loss harvesting strategies may be contributing to the broader selloff across asset classes.

Altcoins’ Sharp Selloff Amid Broader Market Rout

While bitcoin price captured headlines with its moderate decline, altcoins experienced far more severe punishment. The broad-market CoinDesk 20 Index plunged more than 10% during the same period, demonstrating renewed preference for safe-haven positioning.

Individual altcoin performance revealed acute weakness across major layer-1 and infrastructure projects. Ethereum (ETH) dropped 10.8% to below $3,500, though its latest 24-hour reading shows modest recovery potential. Cardano (ADA), Chainlink (LINK), Aptos (APT), Avalanche (AVAX), and Dogecoin (DOGE) all suffered double-digit losses in the range of 15%-20%. Solana (SOL) particularly suffered, hitting its weakest price since early November and nearly erasing the substantial post-election rally that had carried the asset to record highs just weeks earlier—a 26% reversal from those peaks.

The magnitude of altcoin weakness underscores how quickly risk appetite can evaporate in cryptocurrency markets. Nearly $1.2 billion in leveraged derivatives positions faced liquidation across all assets following the Fed decision, with over $1 billion representing long positions—bets on higher prices that were forcefully reversed.

Bitcoin Price Stabilizes as Technical Bounce Develops

Despite the bearish fundamentals, bitcoin price has begun showing technical resilience. The cryptocurrency mounted a recovery bounce driven primarily by technical factors rather than fundamental catalysts. Joel Kruger, market strategist at LMAX Group, explained: “The crypto market has already been on pins and needles around the possibility for a correction following the record run in bitcoin price through $100,000. We got that catalyst from the world of traditional markets—the fallout from Wednesday’s Fed decision was simply too much to ignore.”

However, strategists urge caution about the durability of any bounces. According to recent market updates, bitcoin price has recovered to approximately $68,640 with a 5.04% 24-hour gain—a short-squeeze rally reflecting extreme bearish positioning and thin liquidity rather than renewed fundamental conviction. Joshua Lim from FalconX noted that some funds are chasing this rally, rotating capital into volatile altcoins and derivatives strategies. Key resistance levels for bitcoin price around $72,000 and $78,000 must be broken on a sustained basis to signal a genuine structural recovery.

Market Catalysts Beyond the Fed

The broader context reveals multiple pressures beyond monetary policy. The U.S. dollar index surged above 108—its strongest level since November 2022—reflecting broad safe-haven demand. Ten-year Treasury yields also jumped sharply above 4.6%, the highest since May, further pressuring risk assets including cryptocurrency.

Traditional markets offered little support, with the S&P 500 and Nasdaq only modestly bouncing from Wednesday’s lows, each finishing just 0.5% above the Wednesday close. This muted equity response suggests lingering uncertainty about the economic implications of slower rate cuts and persistent inflation.

What’s Ahead for Bitcoin Price and Cryptocurrency Markets

The path forward remains unclear, with bitcoin price consolidating between technical support and resistance levels. While the recent correction aligns with historical patterns after extended rallies, the fundamental shift in Fed policy expectations represents a genuine structural headwind that cannot be dismissed as mere technical positioning.

Investors should monitor whether bitcoin price can sustain recovery above these key technical thresholds or whether additional selling pressure emerges as traders reassess valuations in a higher-for-longer rate environment.