Bitcoin News Today: Fed Trims Rates 25 BPS, Crypto Sells Off as Easing Fears Dampen Risk Appetite

The U.S. Federal Reserve delivered a 25-basis-point rate cut at its December 10 meeting, lowering the key interest rate to 3.50%-3.75%. The decision came after a closely divided vote, with two members opposing the move entirely and one favoring a 50-basis-point cut. The Fed signaled it would maintain a cautious approach to future easing, with only one rate cut expected in 2026 and another in 2027.

Bitcoin fell below $90,000 in the wake of the decision, dropping nearly 3% as the market digested the Fed's mixed signals. Ethereum also declined sharply, losing over 4% and falling below $3,200. XRP struggled to hold above $2, adding to the broad-based weakness in the crypto market.

The Fed's decision included an announcement of a $40 billion monthly Treasury bill purchase program to address liquidity concerns in the banking system. While the move was not classified as quantitative easing, it raised questions about the potential for more aggressive monetary easing in the future.

Market Volatility and Liquidity Pressures

The crypto market reacted swiftly to the Fed's announcement, with Bitcoin and Ethereum sliding into a sharp correction. Long positions in the cryptocurrency market faced heavy liquidations, with over $440 million in net long liquidations reported in the 12 hours following the Fed's decision. The sell-off intensified as traders assessed the Fed's cautious stance on rate cuts, which contrasted with initial optimism over easier monetary conditions.

Ethereum's decline was particularly steep, as it fell below the $3,200 level and triggered a sell-off across altcoins. Smaller tokens, including Hyperlink and Monero, posted only modest gains, struggling to attract risk capital amid the broader downturn. The market's inability to sustain the initial rally after the rate cut highlighted a lack of conviction among investors.

Technical indicators further underscored the fragility of the market's recent gains. . Ethereum's price action showed a correction from a high of $3,240 to support near $2,920, where buyers temporarily intervened to defend key levels. However, the cryptocurrency remained vulnerable to further downside if it failed to reclaim the $3,140 resistance level.

Fed Policy and the Path Forward

Federal Reserve Chair Jerome Powell emphasized that the Fed would take a "wait-and-see" approach in 2026, acknowledging the risks of inflation remaining stubbornly high and potential weakness in the labor market. He ruled out the possibility of rate hikes in the near term but also signaled that additional easing would only occur if economic conditions warranted it.

The Fed's balance sheet expansion, including the new T-bill purchase program, has been closely watched by market participants. Analysts at Bank of America estimate the program could inject up to $45 billion in monthly liquidity into the banking system, which could indirectly benefit crypto markets by improving investor risk appetite. However, others argue that the program is a response to tight liquidity conditions and not a clear signal of reflationary monetary policy.

Investors remain divided on how the Fed's actions will impact Bitcoin in the longer term. While some analysts believe the rate cuts and liquidity injections could drive Bitcoin toward a renewed bull phase, others caution that the market has not yet seen a consistent shift in ETF inflows or institutional demand. BlackRock's iShares Bitcoin Trust (IBIT) has experienced six consecutive weeks of outflows, indicating a shift in investor behavior toward a more measured approach.

What This Means for Investors

Crypto traders are closely monitoring Bitcoin's ability to reclaim the $94,500 level, which could serve as a key turning point for the market. A sustained move above that threshold could signal renewed confidence in the asset class, while a failure to break out may lead to further consolidation or a deeper correction.

For Ethereum, the immediate focus is on whether it can defend the $3,000 level and build momentum toward the $3,200 resistance. Analysts at Delta Exchange noted that Bitcoin's inability to reclaim $94,000 has also raised concerns about the strength of the overall market. If Ethereum fails to stabilize above $3,200, it could trigger a broader reevaluation of risk assets, including altcoins.

Investors are also keeping a close eye on the political landscape, particularly as President Donald Trump's influence over the Fed's leadership race continues to shape market expectations. Trump's preference for aggressive rate cuts has added an additional layer of volatility to the market, with some analysts suggesting it could accelerate institutional flows into Bitcoin as an inflation hedge. The analysis suggests that Bitcoin may benefit from this shift in policy sentiment.