Synopsis: Bitcoin fell to $109.2K after the Fed’s 0.25% rate cut and QT pause as traders anticipated deeper easing; Powell’s cautious tone and economic uncertainty sparked profit-taking.
The price of Bitcoin recently dropped to $109,200 despite the Federal Reserve’s expected 0.25% interest rate cut and its announcement to end quantitative tightening (QT). Traders had forecasted more rate cuts in 2026, so the sharp Bitcoin decline surprised many, sparking questions about what is troubling the cryptocurrency market right now. Though the Fed’s move usually supports risk assets by easing borrowing costs, Bitcoin’s fall signals caution among investors.
Fed’s Rate Cut and Market Reaction
Bitcoin’s sell-off accelerated immediately after the Fed trimmed rates by 25 basis points, lowering the benchmark fed funds target to 3.75%-4.0%. This was the second rate cut in 2025, aimed at supporting a softening job market amid persistent inflation.
However, the crypto price dropped about 6% from a high of $116,400 on October 27 to the low of $109,200 after the announcement. Other cryptocurrencies like Ethereum also declined 3-5%. Investors largely anticipated the rate cut, which meant no surprise boost for Bitcoin.
The decisive factor was Fed Chair Jerome Powell’s comments that a December rate cut isn’t guaranteed. This cautious tone cooled expectations for near-term easing, causing a sharp negative reaction in crypto markets.
Macro Headwinds Affecting Bitcoin
Despite continued belief that the Fed will cut rates in 2026, investors now focus on broader economic risks. The labor market shows signs of weakness: recent job reports indicated unexpected layoffs and rising unemployment. Inflation remains sticky around 3% core CPI, and geopolitical tensions such as US-China trade issues add uncertainty. Additionally, the ongoing US government shutdown delays important economic data releases.
Bitcoin’s strong correlation with tech stocks further compounds volatility, causing higher swings compared to traditional equities. Traders worry not just about current policy but also about the potential impact of artificial intelligence sector speculation and long-term economic challenges beyond rate decisions. This climate of uncertainty weighs down Bitcoin’s near-term outlook.
Impact of Quantitative Tightening Pause
Another key Fed announcement was the end of quantitative tightening starting December 1. This means the Fed will stop shrinking its balance sheet, potentially adding liquidity to financial markets. Historically, such moves have supported risk assets including Bitcoin as liquidity conditions improve.
Analysts note that while the rate cut itself was priced in, the pause in QT is more significant long-term. It could free up nearly $1 trillion in reserves, which may eventually boost Bitcoin prices. However, this positive potential has not yet shown in immediate market moves, as traders digest overall macroeconomic concerns. The “sell the news” effect combined with leveraged positions unwinding also accelerated the Bitcoin price drop initially.
Volatility and Opportunities
Bitcoin’s technical indicators suggest a mixed short-term picture. The price is hovering just above strong support levels near $108,000 but has slipped below the 50-day moving average. On-chain data points to reduced speculation and increased institutional activity, which may set the stage for accumulation.
Market experts expect continued volatility as investors await upcoming US jobs data and the next Fed meeting in November for clearer policy signals. If economic conditions improve and trade tensions ease, Bitcoin’s price could bounce back toward $120,000 by year-end. For now, this dip presents a buying opportunity for investors who see beyond the current uncertainty.
In summary, Bitcoin’s sell-off after the Fed’s 0.25% rate cut and QT end reflects market caution about future economic risks despite expected monetary easing. Traders are taking profits and reassessing, but the structural backdrop for Bitcoin remains positive over the longer term.
Written By Fazal Ul Vahab C H