The stock market took a small dip after a recent Federal Reserve (Fed) meeting, but Bitcoin stayed surprisingly steady, hanging around $90,000. Let’s break down what happened.
Slower Rate Cuts Spark Market Jitters
The Fed has been cutting interest rates since September, boosting both the crypto and stock markets. However, the December meeting hinted at a slower pace of cuts in 2025, potentially due to inflation concerns related to the incoming Trump administration. This news caused the S&P 500 to drop by 2.55% in the past month.
Bitcoin Holds its Ground (Mostly)
Despite the stock market downturn, Bitcoin showed some resilience. While it did experience an 11% drop in the two weeks following the Fed meeting (Ether dropped even more), this is relatively small compared to Bitcoin’s history. Significant pullbacks are common during bull runs.
According to Vetle Lunde of K33 Research, the Fed meeting was the trigger for the recent market downturn and de-risking. He also noted that Bitcoin’s correlation with the Nasdaq has increased, suggesting a closer link between Bitcoin and traditional tech stocks.
Inflation Concerns and Future Predictions
Although the Fed has cut rates, worries about inflation persist, as seen in rising Treasury yields. Some experts, like Arthur Hayes, predict a significant Bitcoin price drop around Trump’s inauguration. On-chain analysis even suggests a possible correction to $80,000.
However, many still believe in Bitcoin’s long-term potential. At the time of writing, Bitcoin is trading at $94,805, up slightly.
