The cryptocurrency market witnessed a turbulent turn as Bitcoin (BTC) plummeted to $108,000, following the Federal Reserve’s decision to cut interest rates by 0.25%. This marked a 6% decline from its peak of $116,400 earlier this week, surprising many investors who had fully anticipated the rate cut.
The Federal Reserve’s Federal Open Market Committee (FOMC) adjusted its benchmark overnight borrowing rate to a range of 3.75% to 4%. Despite widespread consensus among analysts for this reduction, Bitcoin’s subsequent price action contradicted expectations. Many traders believed that such cuts would elevate cryptocurrency prices, but the reverse occurred.
In a notable move, the Fed’s announcement included plans to cease quantitative tightening on December 1, indicating a shift towards more lenient financial conditions after two years of strict monetary policy. Analysts at Hyblock suggest that historical trends show rate decisions often lead to an initial decline in Bitcoin prices, followed by subsequent recovery, regardless of whether rates are held steady or reduced.
Unfolding Geopolitical Dynamics
The price drop was exacerbated by developments from a meeting between President Donald Trump and Chinese President Xi Jinping. Following this summit, Bitcoin briefly dipped to $108,000, continuing a downward trend that began at $113,000.
During this meeting, Trump announced that U.S. tariffs on China would be lowered from 57% to 47%. He referred to the agreement reached aboard Air Force One as a one-year arrangement, hinting at an extension. This reduction also included immediate cuts to fentanyl tariffs, adding further complexity to the geopolitical landscape influencing market stability.
JUST IN: 🇺🇸 Fed Chair Jerome Powell says December interest rate cut is “far” from certain. pic.twitter.com/IbTs0sVriM
— Watcher.Guru (@WatcherGuru) October 29, 2025
Fed Chair Jerome Powell’s downplay of the certainty surrounding a potential December rate cut added to market anxiety, prompting further selling pressure.
In the broader cryptocurrency ecosystem, XRP and Dogecoin experienced significant losses, falling 4%, while other major coins, including Ether, Solana’s SOL, BNB, and Cardano’s ADA, reported declines up to 3%.
Future Rate Cuts on the Horizon
The Fed’s latest dot plot indicates a baseline expectation of three rate cuts in 2025, with Goldman Sachs analysts projecting at least two more increments of 0.25% by mid-2026. This would position the Fed’s benchmark rate within the 3% to 3.25% corridor, signaling a potential easing of monetary conditions.
The anticipated rate reductions typically bode well for non-yielding assets such as Bitcoin, as increased liquidity generally encourages investors to diversify away from cash-heavy positions into growth and alternative investments. Ending the balance sheet runoff on December 1 promises to reintroduce net liquidity into the market, relieving pressure on financial institutions and enhancing market depth across risk assets.
As traders navigate this intricate landscape, they are now looking beyond the immediate implications of rate cuts. Concerns regarding rising U.S. job layoffs, the ramifications of Trump’s tariff modifications, and speculative dialogues surrounding the artificial intelligence sector add layers of uncertainty for investors.
Looking ahead, Trump confirmed plans to visit China in April, while Xi is expected to reciprocate with a visit to the U.S. in due course, further shaping the geopolitical climate that influences market dynamics.
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