Bitcoin falls below $100,000 as hawkish rate outlook weighs on crypto
Getty Images; Jenny Chang-Rodriguez/BI
- Bitcoin slid below $100,000 Thursday as traders were rattled by the Fed's rate guidance.
- The crypto dropped more than 5% to trade around $98,000.
- Other cryptocurrencies, like Ethereum and XRP, also slumped.
Bitcoin tumbled below the $100,000 threshold on Thursday, weighed down by the outlook for fewer rate cuts in 2025.
While other risk assets like stocks were looking to stage a rebound after a steep plunge on Wednesday, bitcoin continued to sag. The apex token was down by more 5% by midday to trade around $98,835.
Other cryptocurrencies also sold off, with Ethereum and XRP each falling more than 4%. The total crypto market capitalization, meanwhile, was dragged down nearly 7% to $3.41 trillion, according to CoinMarketCap data.
Crypto investors that had been fueling bitcoin's sharp rally over the last few months were rattled after the Fed's December policy meeting on Wednesday, which ended with Fed officials issuing hawkish guidance on the path of interest rates next year.
Despite lowering rates by 25 basis points, central bankers cut their interest rate outlook for 2025, with FOMC members projecting just two rate cuts next year, down from the four projected at the September meeting.
Comments from the Fed Chair deepened the sell-off in risk assets Wednesday afternoon, with Powell saying that the central bank would take a more "cautious" stance when changing the policy rate and that the prospect of future rate hikes was not off the table.
"After breaking $108K on Wednesday, Bitcoin has now dipped below $100K. The entire crypto sector has come under pressure in the wake of the equity market pullback," Louis Navellier, the chief investment officer of Naviellier & Associates, said in a note Thursday morning.
Bitcoin broke past $100,000 for the first time in early December, driven higher by a multi-week rally following Donald Trump's election win. Crypto enthusiasts have dubbed Trump the "crypto president," with hopes swirling that he will boost the market via less regulation and even push the US government to start buying bitcoin itself.