Bitcoin Plummets Below $109,000 After Fed Rate Cut — Classic 'Buy The Rumor, Sell The News' Reaction?

Core Insights - Bitcoin has dropped below $109,000 following the anticipated Fed rate cut, raising discussions about the "buy the rumor, sell the news" phenomenon among crypto traders [1][3] - Fed Chair Jerome Powell's hawkish remarks during the post-meeting press conference have unsettled markets, despite the rate cut being widely expected [2][3] Market Reactions - Initial market enthusiasm faded as Powell emphasized caution, leading to a 5% decline in Bitcoin, which fell below $110,000, while stocks reversed early gains and treasury yields and the U.S. dollar strengthened [3][4] - Traders began to unwind risk exposure, resulting in further crypto liquidations [3] Economic Context - The recent rate cut marks the second of 2025, but Powell's comments have dampened speculation about an aggressive easing cycle [4] - The market reaction is reminiscent of previous "rate cut fakeouts," where initial optimism is followed by selloffs as investors reassess the situation [4] Future Outlook - Analysts suggest two potential short-term scenarios: equities may decline to align with Bitcoin's drop, or Bitcoin could recover if risk sentiment stabilizes, particularly if shorts are squeezed above the $115,000 level [5] - Bitcoin is currently behaving more like gold than equities, indicating its role as a macro hedge amid tightening liquidity [5] Key Catalysts - Upcoming inflation and labor data will be crucial in determining the extent of future Fed easing [6] - Powell's message indicates that there will be no automatic rate cuts, suggesting a need for traders to exercise patience and contrarian conviction in navigating potential volatility [6]