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Bitcoin (BTC) extended its decline on Wednesday after Federal Reserve Chair Jerome Powell delivered unexpectedly hawkish remarks during his post-policy meeting press conference. The leading cryptocurrency fell over 5% in 24 hours, dipping below the $110,000 mark, as investors adjusted expectations for near-term rate cuts.
Powell’s Hawkish Tone Catches Markets Off Guard
Markets had largely priced in another rate cut in December, with odds exceeding 90% prior to the meeting, according to CME FedWatch data. However, Powell’s comments quickly cooled investor optimism.
“A rate cut in December is far from a foregone conclusion,” Powell stated, signaling that the central bank remains cautious despite softening economic data. His tone contrasted with earlier dovish expectations, triggering a selloff across risk assets — from equities to cryptocurrencies.
The Fed did proceed with a 25 basis point cut, lowering the benchmark rate to a range of 3.75%–4.00%. However, Powell’s post-meeting message made it clear that further easing was not guaranteed. Kansas City Fed President Jeffrey Schmid even voted to hold rates steady, underscoring divisions within the Federal Open Market Committee (FOMC).
Bitcoin Price Reacts to Monetary Uncertainty
Following Powell’s remarks, Bitcoin quickly fell from around $111,800 to $109,600, erasing most of its early-week gains. At the time of writing, BTC trades near $110,000, down 5% over the past 24 hours.
The sudden decline coincided with heightened volatility across global markets. The U.S. dollar index (DXY) surged, Treasury yields climbed, and major stock indices reversed earlier gains. The 10-year Treasury yield jumped 8 basis points to 4.06%, reflecting renewed risk aversion among investors.
“The Fed’s cautious tone unsettled markets that were already pricing in aggressive easing,” said Marcin Kazmierczak, co-founder of oracle network RedStone. “The ongoing government shutdown and data blackout have left policymakers in a difficult position — they’re flying blind.”
Kazmierczak added that this uncertainty could lead to heightened volatility for Bitcoin and other digital assets through the remainder of 2025.
Investors Shift Focus to Macro Signals
While Powell acknowledged signs of weakness in the labor market, he maintained that inflation risks remain, warranting a measured policy approach. “We’re seeing progress on inflation, but we can’t declare victory yet,” he said, emphasizing the need for flexibility in future decisions.
Paul Howard, director at crypto trading firm Wincent, noted that Bitcoin remains within a broader consolidation range between $110,000 and $120,000. “Concerns that the December cut might not materialize have caused a short-term pullback,” he explained. “But this could also create a convenient accumulation zone before macro improvements drive risk assets higher in November.”
Analysts agree that the crypto market’s near-term trajectory depends heavily on upcoming macroeconomic data. However, the ongoing government shutdown has led to a delay in several key reports, including employment and inflation figures, leaving traders to navigate limited visibility.
Hawkish Cut Adds to Policy Confusion
The notion of a “hawkish cut” — reducing rates while signaling caution — has added another layer of complexity to market expectations. While the Fed aims to balance economic support with inflation control, investors interpret mixed messages as uncertainty.
“The Fed doesn’t want to appear overly dovish in a fragile economic environment,” said an analyst at CD Analytics. “By hinting that December cuts aren’t guaranteed, Powell is managing expectations and trying to prevent excessive market optimism.”
Historically, Bitcoin has shown sensitivity to U.S. monetary policy shifts, often rallying on dovish news and retracing on signs of tightening or hesitation. The latest remarks reaffirm Bitcoin’s growing correlation with traditional financial markets and interest rate expectations.
Broader Implications for Crypto Markets
Beyond Bitcoin, the broader cryptocurrency market also saw red. Ethereum (ETH) slipped 3%, while Solana (SOL) and Avalanche (AVAX) recorded losses of around 4%. The total crypto market capitalization declined by roughly 2.8% to $4.1 trillion, according to CoinMarketCap.
Despite short-term selling pressure, long-term sentiment remains cautiously optimistic. Analysts suggest that once policy clarity returns — and if inflation continues to moderate — the environment could favor renewed crypto accumulation heading into 2026.
“The volatility we’re seeing is largely macro-driven,” Howard said. “As uncertainty fades, crypto assets are likely to recover faster than traditional markets due to growing institutional exposure.”
Outlook: Volatility Ahead, Accumulation Opportunity?
As investors digest Powell’s comments, attention now shifts to upcoming FOMC member speeches and inflation projections in November. Markets will be watching for any signs that policymakers are leaning toward easing again.
For now, Bitcoin’s support at $110,000 remains critical. A decisive break below could trigger a deeper correction toward $107,000, while reclaiming $113,000 may revive bullish momentum.
In the meantime, traders are likely to stay cautious amid the uncertainty. “This environment rewards patience,” Kazmierczak added. “The Fed’s unpredictability may frustrate markets in the short term, but for disciplined investors, volatility often creates opportunity.”
