Bitcoin News Today: Bitcoin's Plunge Mirrors Fading Hopes for Fed Easing

Bitcoin's price has experienced a significant decline amid growing concerns over the Federal Reserve's rate-cut trajectory and rising inflationary pressures. After reaching an all-time high above $124,000, Bitcoin fell below $117,000 following hotter-than-expected inflation data, which has diminished market expectations for aggressive interest rate cuts by the U.S. central bank. This shift in sentiment was fueled by key economic reports, including the July Consumer Price Index (CPI), which, although lower than anticipated at the headline level, revealed a notable acceleration in core and "supercore" CPI, particularly in the services sector [1]. Additionally, the July Producer Price Index (PPI) surged by 0.9% month-over-month, the highest increase in three years, signaling a delayed reaction to U.S. tariff policy as companies now pass on inflationary costs to consumers [1].

The recent macroeconomic developments have led investors to recalibrate expectations for rate cuts. As of August 18, 2025, the CME FedWatch Tool indicated that investors are now pricing in only two rate cuts for the remainder of the year, down from the previously anticipated three [1]. This change has had an immediate and visible impact on the crypto market, with Bitcoin and other major cryptocurrencies experiencing sharp price corrections. On Friday, Bitcoin deposits on Binance surged, typically seen as a sign of capital movement for selling, while spot ETFs for Bitcoin and Ethereum recorded net outflows [1]. Ethereum, the second-largest cryptocurrency, broke its all-time high in USD ($4,860) at the start of the week but failed to surpass it, trading at around $4,460 by the end [1].

The market's anxiety has extended to broader crypto sentiment, with the total market capitalization dropping to $3.89 trillion, a 3.2% decline overnight. Bitcoin, which had seen a buying spree from institutional investors and companies such as Michael Saylor’s Strategy, now trades 7% below its peak, at $115,608.51 [3]. Additionally, Treasury Secretary Scott Bessent's recent comments that the U.S. government would not be joining these institutional buying efforts further weakened investor confidence, particularly in the context of already diminished rate-cut expectations [2].

The Federal Reserve’s upcoming Jackson Hole Economic Symposium, scheduled from August 21 to 23, will be a critical event for market participants. The symposium will bring together central bankers, policymakers, and economists to discuss key macroeconomic issues, including the state of labor markets and the potential for further monetary easing. Fed Chair Jerome Powell is expected to deliver a speech on U.S. monetary policy, with investors closely watching for hints regarding the September rate decision. Given the Fed's expressed concerns about the inflationary impact of tariffs in recent FOMC meetings, any indication of a delayed or smaller rate cut would likely intensify downward pressure on Bitcoin and other cryptocurrencies [1].

The market has also been influenced by increased political and economic uncertainty, with the July FOMC meeting minutes due for release on Wednesday. These minutes could provide further clarity on whether the Fed's stance on rate cuts is shifting in response to recent inflationary pressures. If the minutes suggest continued support for cuts among policymakers, the crypto market may experience renewed volatility. However, with the current data environment and the Fed’s cautious stance, the likelihood of aggressive easing appears to be diminishing [1].

As the market continues to brace for potential volatility, Bitcoin's dominance in the crypto space remains strong at 59%, though the broader altcoin market has also been affected by the sell-off. Out of the top 100 cryptocurrencies, only three showed gains of more than 1% overnight, while nearly all others recorded losses [3]. The 24-hour trading volume increased to $187 billion, reflecting heightened market activity amid uncertainty [3]. Investors are now closely monitoring key macroeconomic indicators, including the upcoming U.S. jobless claims data and any further developments at the Jackson Hole symposium, for potential turning points in the crypto market's trajectory [2].

Source:

[1] Fading Fed Rate Cut Hopes: Is a Bitcoin Price Drop Next? (https://www.mitrade.com/insights/news/live-news/article-3-1046487-20250818)

[2] Crypto losses continue with inflation clouding Fed policy outlook (https://qz.com/crypto-bitcoin-losses-continue-inflation-clouding-fed-rate-cut)

[3] Fed Fears Drag Down Cryptos (https://www.rttnews.com/3566978/fed-fears-drag-down-cryptos.aspx)