- Fed’s rate cut leads to Bitcoin volatility, impacting market perspectives.
- Bitcoin surpassed 94,000 USD, then fell to 92,000 USD.
- Institutions maintain support for Bitcoin despite macroeconomic concerns.
Bitcoin experienced significant volatility after Federal Reserve Chair Jerome Powell announced a rate cut at the December 2025 FOMC meeting, emphasizing ongoing inflation and labor market challenges.
The announcement’s impact underscores market uncertainty regarding future policies, triggering immediate fluctuations in Bitcoin and other risk assets.
Federal Reserve Chair Jerome Powell’s December 2025 Federal Open Market Committee (FOMC) decision led to significant fluctuations in Bitcoin’s price. The FOMC announced a 25 basis points rate cut, part of a cautious monetary approach balancing inflation risk and labor market fragility.
Market Reaction
Bitcoin’s value briefly surged above 94,000 USD before settling around 92,000 USD within days. The Fed’s decision influenced trading activities on major exchanges, with notable impacts on CME Bitcoin futures and spot Bitcoin ETFs.
While Bitcoin experienced notable swings, Ethereum and other major cryptocurrencies exhibited smaller percentage changes. Market participants view the Fed’s cautious approach as a potential stabilizer, impacting cryptocurrency futures and ETFs.
“When the Fed cuts but still pretends inflation is under control, that’s long-term fuel for Bitcoin, even if the path is a rollercoaster.” — Arthur Hayes, Co‑founder, BitMEX
Cross-asset Correlation
Data indicates that Bitcoin’s behavior was heavily correlated with traditional risk assets, particularly those in growth sectors. The cryptocurrency’s volatility offers insights into cross-asset correlation metrics, where it behaved like other speculative assets amid policy announcements.
Historically, Bitcoin has shown significant reactions to Fed policies. The current volatility mirrors past instances, such as 2019’s rate cuts and the 2022 hike cycle. These events have historically resulted in Bitcoin’s price moving strongly in response to Fed guidance.
