Bitcoin and Ethereum Prices Shift Following Federal Reserve’s Decision
On Wednesday, Bitcoin and Ethereum experienced price fluctuations in response to the Federal Reserve’s announcement regarding a 0.25% cut to its benchmark interest rate and the resumption of Treasury bill purchases. This change isn’t without controversy; the decision wasn’t unanimous, with two members preferring to maintain current rates and another suggesting there should be further cuts.
Following the Fed’s announcement, Bitcoin was trading at around $92,000, reflecting a decline of 1.4% over the previous day, as reported by CoinGecko. Meanwhile, Ethereum saw a slight increase of 0.6%, sitting just above $3,300, while Solana dipped by 3.2% since yesterday.
In its post-meeting statement, the Fed didn’t firmly indicate that more cuts are on the horizon for the upcoming year, emphasizing the need to assess future economic data, the shifting landscape, and risk balances.
Additionally, the Federal Open Market Committee (FOMC) announced the revival of short-term Treasury purchases: “The Committee has concluded that reserve balances are at a sufficient level and will initiate purchases of short-term Treasury securities as necessary to ensure an adequate supply of reserves,” the FOMC stated.
Economic forecasts from officials still suggest the potential for two additional rate cuts, though opinions vary widely. One official has even speculated about up to six cuts of 0.25% next year. “Given the current concerns around a weakening labor market and persistent inflation, it’s not surprising that the Fed is cautious about making immediate commitments to rate cuts,” remarked Fabian Dory, Signum Bank’s chief investment officer.
The decision made on Wednesday was influenced by the absence of certain government data due to a recent shutdown. Key reports, like the Consumer Price Index for November, are pushed back to December 18, and last month’s employment figures remain unreleased.
Interestingly, the ADP National Employment Report from last week showed a reduction of 32,000 jobs last month, and it suggested that job creation may stagnate in the latter part of 2025, indicating a particularly weak performance in manufacturing during November.
It seems central banks are navigating a tricky situation. If they cut rates too quickly, it could trigger pricing pressures from tariffs. Conversely, a slow adjustment might exacerbate labor market issues and lead to a recession.
That said, the Fed’s decision to cut rates was largely anticipated. Before the meeting, traders had estimated an 89% likelihood of a quarter-point cut being made across three consecutive meetings.
