Bitcoin News Today: Fed's 10-2 Split and Trump's Threats Shake Crypto Markets

Federal Reserve Chair Jerome Powell has underscored the economic toll of the ongoing U.S. government shutdown, warning that the data blackout complicates policy decisions as inflation remains elevated, according to an Economic Times report. During a recent news conference, Powell acknowledged the shutdown's drag on economic activity but emphasized that its effects would reverse once resolved. The central bank simultaneously announced a 25-basis-point rate cut, lowering the federal funds rate to a range of 3.75%-4.00%, alongside a pause in balance sheet reduction. The Congressional Budget Office estimates the shutdown could reduce GDP by at least $7 billion by 2026, with impacts worsening as delays persist.

The Fed's decision revealed internal divisions, with a 10-2 vote split signaling Powell's waning control over policymakers, as noted in an Investing.com article. Two officials—Stephen I. Miran and Jeffrey R. Schmid—dissented, with Miran advocating for a 50-basis-point cut and Schmid favoring no change. JPMorgan's Bob Michele described Powell as "losing his grip" on the Fed, noting the dissenters' stances reflected growing skepticism about the central bank's approach. Powell's press conference added uncertainty, as he stated a December rate cut was "far from" guaranteed, complicating market expectations.

Meanwhile, President Donald Trump has intensified pressure on Powell, criticizing him as "incompetent" and hinting at replacing him before his term expires in May 2026, according to a Zycrypto report. Treasury Secretary Scott Bessent confirmed the administration is narrowing a shortlist of five candidates, including Fed Governor Christopher Waller and BlackRock's Rick Rieder. Trump's public attacks, including labeling Powell "Jerome 'Too Late' Powell," reflect his frustration with the Fed's reluctance to lower rates more aggressively to stimulate growth and reduce debt costs.

The crypto market has mirrored this volatility, with total capitalization dipping to $3.89 trillion as investors awaited Fed signals. Bitcoin fell 2% to $112,859, while Ethereum declined 3% to $3,991. Analysts linked the pullback to uncertainty around Powell's policy trajectory, though spot Bitcoin ETFs saw $202.48 million in inflows, suggesting underlying demand, according to a Yahoo Finance article. Bitwise's new Solana ETF attracted $69.5 million on its debut, signaling cautious optimism about altcoin exposure amid potential liquidity easing.

The Fed's rate cut and pause in quantitative tightening have positioned crypto markets for potential gains, historically favoring risk assets during dovish cycles. However, liquidity constraints persist, with analysts cautioning that the end of balance sheet reductions does not equate to quantitative easing. The Crypto Fear and Greed Index fell to 39 ("Fear"), reflecting lingering caution despite the policy shift, as noted in a StreetInsider piece. Market participants remain attuned to Powell's post-meeting remarks, with a dovish tone potentially catalyzing a short-term rally in Bitcoin and Ethereum.

The Fed's decision to end quantitative tightening by December marks a pivotal shift toward easing, but traders are wary of prolonged liquidity stress, according to an AMBCrypto article. Doctor Profit, a market analyst, warned that tight money conditions may persist even with rate cuts, noting the repo market's fragility could trigger a crisis worse than 2019. Bitcoin's short-term outlook remains mixed, with key resistance levels at $115,000 and support at $110,500, a dynamic explored in a CryptoFront article.