Bitcoin experienced a significant drop below the $100,000 mark on Thursday, following the Federal Reserve's indication of fewer rate cuts in 2025. The cryptocurrency slid more than 5% to trade around $98,000, while other digital assets like Ethereum and XRP also saw declines.
Investors in the crypto market were unsettled by the Fed's policy meeting on Wednesday, where officials provided a hawkish outlook on interest rates for the upcoming year. Despite a 25 basis point rate cut, the central bank revised its interest rate projections for 2025, with only two rate cuts expected next year as opposed to the previously projected four.
Federal Reserve Chair Jerome Powell's comments further exacerbated the sell-off in risk assets, as he emphasized a more cautious approach to adjusting the policy rate and did not rule out the possibility of future rate hikes. This led to a downturn in both the equity and crypto markets.
Louis Navellier, the chief investment officer of Navellier & Associates, noted the pressure on the entire crypto sector following the pullback in the equity market. Bitcoin had surpassed $100,000 for the first time in early December, driven by a rally after Donald Trump's election victory. Some crypto enthusiasts have referred to Trump as the "crypto president," anticipating a boost in the market through reduced regulation and potential government investment in bitcoin.
Overall, the drop in bitcoin below $100,000 was a result of the Fed's rate guidance and the subsequent impact on investor sentiment in both the traditional and digital asset markets.