Bitcoin Pulls Back from Record High Afterdovish Fed Outlook for 2025

In contrast to the expectations that Bitcoin could hit the $110,000 mark, the biggest cryptocurrency experienced a significant drop in a single day.

output: Despite earlier expectations that Bitcoin could hit the $110,000 mark, the leading cryptocurrency encountered a substantial drop in a single day.

According to CoinMarketCap, Bitcoin experienced its first decline in four days as speculative bets across financial markets eased following cautious remarks from Federal Reserve officials regarding the pace of reducing borrowing costs. The cryptocurrency briefly fell by as much as 5.3% to $100,680, having reached an all-time high of $108,000 earlier in the week.

"The broader market is adjusting to a less dovish Fed outlook for 2025," said Zaheer Ebtikar, founder of crypto fund Split Capital. This prompted crypto traders and market makers to reduce their risk exposure.

On Wednesday, the Fed lowered its benchmark interest rate for the third time but signaled fewer cuts in 2025 than previously anticipated. While lower rates typically bolster demand for riskier assets such as cryptocurrencies, the outlook has temporarily impacted prices.

However, David Lawant, head of research at crypto prime broker Falcon X, noted that Bitcoin's weaker correlation with major stock indexes could ultimately limit the long-term impact of these macroeconomic factors.

"While slower rate cuts are pressuring risk assets now, industry-specific developments and anticipated policy shifts under the incoming administration are likely to drive the market in the months ahead," Lawant said.

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