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After the Interest Rate Decision, #Bitcoin Rebounds, Surpassing $112,000

The Federal Reserve’s latest rate cut didn’t play out the way most crypto traders hoped. Bitcoin slipped toward 111,000 after the decision, while stocks stayed mostly stable and gold even gained a little. It raised a simple question why did the same rate cut help traditional assets but hurt Bitcoin? At first glance, it seems odd. Lower rates usually mean more liquidity, and that’s often good for crypto. But this time, the Fed’s tone and the market setup made Bitcoin react very differently. The Fed cut rates by 25 basis points, as expected, bringing the policy rate closer to 3.75 to 4 percent. But Chair Powell’s comments after the decision gave the market a dose of caution. He said inflation is easing but still above target, and that recent tariffs have had only a mild impact on overall price pressures. That means inflation might not drop fast enough to justify more cuts soon. This “mild” inflation view changed how traders looked at risk assets. Stocks took it calmly because most companies can still benefit from a steady economy. Gold saw small gains as investors treated it like a slow but safe bet. Bitcoin, on the other hand, fell right away. The main reason is that crypto reacts more sharply to liquidity changes. When there’s even a small sign that money conditions might stay tight for longer, Bitcoin tends to move faster and harder than other assets. Over the past few years, data has shown that Bitcoin’s returns have a strong connection with changes in the Fed funds rate. When the Fed cuts deeply or signals more cuts ahead, Bitcoin rallies as traders expect easier access to capital and higher risk appetite. When the Fed sounds cautious, even one small rate cut can feel like a disappointment. In this case, the Fed’s message was clear: the easing cycle may be short. That hit crypto sentiment right away. Bitcoin fell from around 116,000 before the decision to roughly 111,000 within hours. Ether and other top tokens also dropped, but the reaction in Bitcoin was the clearest. For comparison, the S&P 500 stayed roughly flat, while gold rose around 0.5 percent. That tells you crypto is still more sensitive to monetary tone than to the cut itself. Another way to look at it is through correlation. In 2024 and 2025, when the Fed raised rates, Bitcoin had one of its weakest stretches, losing around 20 percent while stocks held steady. Once the Fed started talking about cuts earlier this year, Bitcoin rallied almost 40 percent. That shows how directly the crypto market ties its mood to liquidity expectations. This time though, Powell’s cautious words about tariffs and inflation reminded traders that easy money might not last long. He said tariffs have had a mild effect on prices, which means the Fed can’t count on them to slow inflation fast enough. That leaves open the chance that rates stay higher for a while, even after this cut. For Bitcoin, that matters a lot. The asset thrives when the money supply is growing and risk appetite is high. In a world where liquidity is limited, crypto tends to lag behind traditional assets like gold, which benefits from uncertainty, or stocks, which still get support from earnings and buybacks. So what does this mean for the weeks ahead? If the Fed holds off on more cuts, BTC could trade sideways or even retest support near 105,000 to 108,000. The next big driver would be fresh inflation data or signs that the Fed is ready to move again. Without that, crypto traders may stay cautious. Still, the long-term view hasn’t changed much. The overall macro trend is turning toward easier policy, even if it’s slower than before. Each small cut still helps reduce funding pressure and improves liquidity over time. It just takes longer for the effect to show in Bitcoin’s price because traders are watching for stronger signals first. Here’s a quick summary of how different assets reacted to this latest move: Bitcoin: Dropped from 116,000 to around 111,000. Traders priced in fewer cuts and reduced leverage positions. Stocks: Stayed mostly flat. The Fed’s cautious stance didn’t hurt equities much because company earnings have been holding up. Gold: Moved higher, around half a percent, as investors shifted to safety while keeping an eye on inflation. That spread tells the story. Bitcoin is still the highest beta asset among the group it moves more aggressively when the tone shifts, good or bad. For cross-asset traders, the key takeaway is that crypto reacts first when liquidity expectations change. If Powell or the Fed hint at a pause, Bitcoin often leads the drop. When they open the door to more easing, Bitcoin usually leads the recovery. In a paused easing environment, where cuts slow down or stop, Bitcoin can still find a floor. But rallies will depend more on global liquidity, not just the Fed. Traders might look to other factors like Asian market flows or stablecoin activity for clues. Scenario-wise, if inflation stays sticky and the Fed holds rates for another quarter, Bitcoin could test 100,000 before finding stronger support. But if inflation cools faster and the Fed signals another cut in December, the rebound could be just as sharp as the drop we saw this week. BTC reacts faster and more emotionally to policy tone than most assets. The Fed’s cautious cut didn’t help because it hinted at fewer cuts ahead, not more. Stocks can live with that, gold can even like it, but Bitcoin needs clear signs of looser liquidity to shine.

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$BTC Plan if they tap into this zone again - would add if there's a good reaction. Wrong below 106.6k