Bitcoin Plummets Despite Fed’s ’Soft Pivot’: Why Rate Cuts Fail to Spark Rally

Markets shrug off dovish Fed signals as Bitcoin continues its downward spiral.

The Pivot That Wasn't

Federal Reserve officials hint at potential rate cuts, but crypto markets respond with a collective shrug. Bitcoin drops another 8% despite what analysts call a 'soft pivot' toward easier monetary policy.

Institutional Skepticism Runs Deep

Major funds continue pulling capital from crypto ETFs. Trading volumes slump to three-month lows as traditional finance players remain unconvinced. One portfolio manager quips, 'The Fed's playing checkers while crypto's playing chess - and losing.'

Technical Breakdown Accelerates

Key support levels crumble as selling pressure intensifies. The 50-day moving average provides no defense against the bearish onslaught. Mining operations report margin pressure as hash rates adjust to new price realities.

When Fundamentals Don't Matter

Sometimes markets just want to go down - no matter what the central bankers say or do. As one cynical trader noted, 'The only thing dropping faster than Bitcoin is Wall Street's credibility in predicting either.' The great crypto disconnect continues, leaving bulls searching for answers and bears counting their profits.

The Federal Reserve’s 25 basis point cut was hardly a surprise — the market had priced it in weeks ago. What wasn’t priced in was the vibe shift. The Fed’s DOT plot projects three more cuts in 2025, with analysts at Goldman Sachs calling for two more cuts by mid-2026, potentially bringing the federal funds rate down to the 3.0–3.25% range.

That sounds like the kind of macro easing that should light a fire under risk assets. Instead, Bitcoin’s 6% drop from its Monday high of $116,000 shows traders are already thinking several moves ahead. The short-term rate cut was expected — the long-term outlook is murky.

Bitcoin sank to $107,000, Source: BNC

The Fed also confirmed it will end balance sheet reduction (QT) on December 1, halting the slow bleed of liquidity that’s been draining markets since 2022. That’s the headline most people missed: QT is over. But that doesn’t automatically mean “money printer go brrr” again.

Liquidity isn’t just about what the Fed does — it’s about what investors think comes next. And right now, they’re asking whether Powell’s hand was forced by softening job data, rising layoffs, and stubborn inflation. In other words, the rate cuts might be less “bullish pivot” and more “damage control.”

Crypto has always front-ran macro narratives, and this one’s no different. The market’s reading the Fed’s MOVE not as dovish, but as a sign the economy is losing altitude. Layoffs are ticking up, growth is stalling, and the fiscal picture looks messy — especially if Trump’s tariffs and AI bubble speculation drag on global sentiment in 2025.

As Hyblock analysts noted:

“Recent history has shown that the FOMC leads to a price drop in BTC, followed by a move up. If price does dip post-FOMC and signs of bullish confluence emerge, such as bid-heavy orderbooks, it WOULD likely present good opportunities for investors.”

Translation: BTC’s drop might just be the knee-jerk sell-off before smart money starts accumulating again — once the dust settles.

The market’s now watching Powell’s FOMC press conference for clues on how serious the Fed is about loosening policy next year. Traders want to know if this is a pivot or just a pause before panic.

The irony? Even as rate cuts and the end of QT should be tailwinds for Bitcoin, macro uncertainty is reminding everyone that liquidity alone doesn’t drive bull markets — confidence does.

And right now, Wall Street doesn’t seem confident in anything.