Bitcoin Falls After Rate Cut Decision: Why Good News Turns into Bad News?

Bitcoin – the leading cryptocurrency in the market – unexpectedly reversed after the Fed’s interest rate cut decision last night. Although the 25 basis point cut to 3.25% was fully expected, the accompanying message is what caused the market to “lose momentum.” Fed Cuts Rates But Market Sentiment Turns Sour Immediately after the announcement, BTC dropped below $90,000, down 2.4% from the Asian session’s opening. ETH fell more than 4% to $3,190, while the CoinDesk 20 index also lost over 4%. The main reason? Investors realized the Fed is not as “lenient” as hoped. Although the Fed started buying short-term Treasury bonds worth $40 billion to support banking liquidity, this is not QE – the program that injected significant liquidity into the market in 2020–2021. Fed Disagreement – Rate Cut Outlook Becomes Murkier The “braking” was evident when: 2 FOMC members voted to keep rates unchanged, resisting a cut.6 members believed the current cut was “inappropriate.” The Fed only projected one more rate cut in 2026, far fewer than the 2–3 cuts market expectations. Greg Magadini (Amberdata) commented that the Fed is deeply divided, making it difficult for investors to forecast the interest rate path until May 2026 – when the Fed chair’s position might change, especially if Trump appoints his own people to push for a faster rate cut. He straightforwardly stated: the market is likely to need a “deleverage” (deleverage) or a sharp decline to force the Fed to act more decisively. BTC Follows Stocks – Fails to Surpass $94,000 Mark Shiliang Tang (Monarq Asset Management) noted that BTC is “copying” stock market movements. Although initial reactions were quite positive, prices continued to fall along with US stock futures. Notably: BTC tried three times to break through the local peak of $94,000 within two weeks but all failed. Implied volatility (implied volatility) also decreased gradually – signaling fewer major catalysts remaining for the rest of the year. This Is Not QE – Just Liquidity Management Many in the crypto community quickly called the new bond purchase program QE, but the reality is quite different: The Fed is only buying short-term bonds, mainly to “rescue” liquidity in the money market.This is not a large-scale money printing program designed to keep long-term interest rates low like QE 2020–2021.Andreas Steno Larsen sarcastically remarked: “This is not QE like a Lambo. It’s more like QE ‘Uber arriving in 7 minutes’.” Some experts believe the Fed is “getting ahead of the curve” to avoid a liquidity crunch similar to 2019. As the analysis account EndGame Macro states: “Instead of waiting for the market to panic like in 2019, the Fed is buying a safety buffer in advance. Simply to ensure the financial system has enough oxygen without breaking down along the way.” Conclusion The crypto market’s negative reaction is not because of the rate cut, but because: The Fed cuts rates but signals ‘no easing.’ The rate reduction path becomes uncertain due to internal Fed divisions.The new bond purchase program is not QE, so risky asset flows cannot be expected to surge into crypto.BTC repeatedly failed to surpass the $94,000 mark, indicating weak buying pressure. In the short term, the market may continue to “de-risk” to find a new equilibrium – and this could be an opportunity for patient investors.