The Federal Reserve reduced its benchmark interest rate by 25 basis points to a range of 3.75%-4% on Wednesday, marking the second consecutive rate cut as policymakers seek to support a softening labor market amid ongoing economic uncertainty.
The 10-2 vote revealed significant division within the FOMC, with Governor Stephen Miran dissenting in favor of a larger 50-basis-point cut while Kansas City Fed President Jeff Schmid opposed any reduction at all.
This rate cut happened despite the federal government shutdown, which has limited access to critical data.
The decision came hours after the Bank of Canada delivered its own 25-basis-point cut to 2.25%.
Markets reacted with immediate volatility, with $300 million liquidated from crypto markets within 15 minutes of Fed Chair Jerome Powell’s FOMC speech.
However, Bitcoin subsequently recovered to hold above $112,000 as traders digested the implications of the rate cut and the Fed’s announcement to end quantitative tightening on December 1.
Rate Cut Meets Market Skepticism
The Fed’s statement repeated its assessment that “job gains have slowed“.
It acknowledged that “risks to employment rose in recent months,” while characterizing inflation as having “moved up since earlier this year and remains somewhat elevated.”
The central bank’s decision to halt balance sheet reduction after shedding more than $2 trillion in assets since 2022 indicates growing concern about liquidity conditions in money markets, with the balance sheet now below $6.6 trillion for the first time since 2020.
Fed Chair Jerome Powell’s comment that a December rate cut is “far” from certain further dampened expectations for additional easing, despite CME FedWatch data showing investors still favor another quarter-point reduction at the year’s final meeting.
The ongoing government shutdown has severely hampered the Fed’s policy deliberations, with the Fed chair saying it “will affect the economy” if it continues.
According to Bloomberg, the shutdown is freezing most economic data releases, forcing officials to reference unemployment figures only “through August” and rely on delayed reports like September’s consumer price index, which showed core inflation rising 3% year-over-year, well above the 2% target.
Bitcoin Bulls Eye $150k Despite Near-Term Headwinds
MicroStrategy Chairman Michael Saylor predicted Bitcoin will reach $150,000 by year-end, calling it “the consensus of the equity analysts that cover our company and the Bitcoin industry right now.”
He also projects that Bitcoin could climb to $1 million within 4 to 8 years and eventually reach $20 million over a 20-year horizon, assuming 30% annual growth.
However, analyst Wilberforce Theophilus cautioned that markets had already priced in either no cut or a 25-basis-point reduction.
He argues that significant rallies would only materialize with unexpected moves of 50-75 basis points or a shift from quantitative tightening to quantitative easing, which he called “more important than the rate cut.”
Speaking with Cryptonews, VALR CEO Farzam Ehsani characterized Bitcoin’s recovery above $115,000 as “more than just another relief rally,” citing on-chain data showing whale wallets holding 10,000-100,000 BTC accumulated over 45,000 BTC since the October crash.
He noted that the rally has been driven by “measured spot absorption and mild short covering” rather than high-leverage momentum trades.
Ehsani emphasized that sustainability depends on follow-through from both macro policy and market demand, with technical resistance at $116,000-$117,000 and potential upside targets of $126,000-$130,000 by year-end.
However, he warned the rally remains “structurally dependent on whales and institutional desks” without broader retail participation and ETF inflows.
Technical Analysis Points to Near-Term Correction
Bitcoin’s historical pattern around FOMC meetings reveals consistent 6-8% declines following the last three announcements in June, July, and September before recovering to new all-time highs.
Source: X/@TedPillowsThis raises the question of whether the sell-the-news dynamic will repeat despite the dovish policy stance.
The current price action at $112,000-$113,000 faces immediate pressure from an unfilled CME futures gap between $111,000 and $113,000.
Analysts note that Bitcoin needs to decline approximately $1,000 to complete the technical gap-fill that typically occurs as price revisits levels where futures markets were closed while spot trading continued.
Elliott Wave analysis suggests the recent structure represents wave (ii) of a larger corrective pattern, with projections anticipating further decline toward the $110,000 region following gap completion, and deeper support zones identified around $104,000-$108,000 if selling pressure intensifies.
Currently, the near-term downside toward $110,000-$111,000 appears more probable than an immediate continuation higher.
However, the historical pattern of post-FOMC recoveries provides an optimistic longer-term framework assuming bull-market conditions persist.
Bitcoin’s most likely near-term trajectory involves an initial decline to complete the CME gap at $111,000, followed by a potential extension toward $108,000-$110,000 as wave structure completes.
After that, it will establish support and resume upward momentum toward Saylor’s $150,000 year-end target, contingent on macro conditions stabilizing and institutional accumulation continuing.
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