Fed Rate Cut Sparks Classic ’Buy the Rumor, Sell the News’ Pattern in Bitcoin (BTC) Price

Bitcoin just gave traders a masterclass in market psychology.

The Setup: Anticipation Builds

For weeks, whispers of a Federal Reserve pivot dominated financial headlines. The mere prospect of looser monetary policy sent a jolt through risk assets. Digital gold, long sensitive to liquidity expectations, started climbing. The narrative was simple: cheaper money equals a greener light for speculative investment. Portfolio managers and retail punters alike began positioning for the inevitable rally.

The Event: News Hits the Tape

The rate cut arrived—precise, measured, and fully telegraphed. Analysts had dissected every possible basis point. The moment the official statement dropped, a wave of algorithmic and human trades executed. Initial momentum was positive, a brief victory lap for the bulls who bought the rumor. Then, the real move began.

The Reaction: The Classic Unwind

Gains evaporated faster than a meme coin's utility. Selling pressure mounted as profit-takers cashed in their chips. The 'event risk' was over, the catalyst priced in. What followed was a textbook 'sell the news' event, a brutal reminder that in markets, anticipation often outperforms realization. It’s the oldest play in the book—buy on expectation, sell on fact.

Market Mechanics: Why This Keeps Happening

This pattern isn't a flaw; it's a feature. Modern markets front-run official data. By the time a central bank announcement is public, sophisticated capital has already moved. The resulting volatility isn't chaos—it's the sound of positions rebalancing. For Bitcoin, this dance with macro policy is becoming a rite of passage, proving its integration into the global financial bloodstream, cynical hedge fund tactics and all.

The Takeaway: Navigating the Noise

So, what's a trader to do? Recognize the rhythm. Macro catalysts are now key drivers, but their impact is often backwards—the rally happens *before* the headline. It demands discipline to resist chasing a confirmed narrative and the stomach to act when uncertainty is highest. After all, the real money isn't made following the press release; it's made positioning before the journalists finish their coffee. The Fed might control the cost of money, but the market will always control the timing of the joke.

TLDR

• Bitcoin dropped to $89,000 after the Federal Reserve’s third consecutive rate cut on Wednesday before recovering to around $93,000
• The Fed has cut interest rates by a total of 0.75% over three months from September to December 2025
• Each rate cut has followed a “buy the rumor, sell the news” pattern with short-term sell-offs followed by rebounds
• Altcoins like Cardano and Avalanche declined 6-7% while Bitcoin showed more resilience during the recovery
• The Fed’s updated dot plot and $40 billion Treasury purchase program were viewed as mildly bullish by markets

Bitcoin experienced a volatile trading session following the Federal Reserve’s rate cut decision on Wednesday. The cryptocurrency dropped to $89,000 before climbing back above $93,000.

The Federal Reserve delivered its third consecutive interest rate cut this year. The central bank has reduced rates by a total of 0.75% over the three-month period from September to December 2025.

Price Action Follows Familiar Pattern

Bitcoin’s price movement matched a recurring pattern seen with previous Fed rate cuts. Each of the three cuts triggered short-term sell-offs despite being fundamentally bullish for crypto in the long term.

Onchain analytics firm Santiment described this behavior as a classic “buy the rumor, sell the news” pattern. The firm noted there is “typically a bounce after the dust settles.”

The US Fed made three strategic cuts over the past 3 months, resulting in a total of an 0.75% reduction to interest rates.

1⃣ September 17, 2025: Fed lowered the target range to 4.00 %–4.25 % (from 4.25 %+) at the 16–17 Sep meeting.

2⃣ October 29, 2025: Fed cut the rate to… pic.twitter.com/X6DWypvq5t

— Santiment (@santimentfeed) December 11, 2025

Bitcoin slipped below $90,000 immediately after the Fed announcement. The cryptocurrency then recovered to spike at $93,500 on Coinbase during Friday morning trading.

Resistance at the $93,500 level proved strong. Bitcoin pulled back to around $92,300 where it was trading at the time of reports.

Altcoins Lag Behind Bitcoin

Most altcoins did not participate in Bitcoin’s rebound. Cardano’s ADA and Avalanche’s AVAX led declines among major cryptocurrencies.

Both ADA and AVAX dropped 6-7% on the day. Ether held above $3,200 but was down 3% during the same period.

Jasper De Maere from trading firm Wintermute said the price action showed crypto’s growing separation from equities. He noted that only 18% of sessions over the past year saw bitcoin outperform the Nasdaq on days with major economic news.

Fed Policy Details

The Fed’s updated dot plot leaned slightly hawkish according to analysts. The dot plot shows where Fed policymakers expect interest rates to MOVE in the future.

The central bank also announced $40 billion in short-term Treasury purchases. Ko described this as a “technical maneuver for financial system liquidity” rather than a large-scale stimulus program.

Markets interpreted the Treasury purchases as mildly bullish. U.S. stocks moved higher alongside Bitcoin’s rebound.

The Nasdaq closed down just 0.25% after being as much as 1.5% lower earlier in the day. The S&P 500 finished modestly in the green while the DJIA gained 1.3%.

Market Conditions

Analytics firm Swissblock said downward pressure on Bitcoin is losing steam. The firm noted the market is stabilizing but cautioned it is not yet out of the woods.

The Bitcoin Risk Index is showing a crucial step:

The second selling wave is weaker than the first, and selling pressure is not intensifying.

Signs of stabilization… but not confirmation.

We still need Risk

— Swissblock (@swissblock__) December 11, 2025

“The second selling wave is weaker than the first, and selling pressure is not intensifying,” Swissblock said. The firm added there are signs of stabilization but no confirmation yet.

Lower interest rates typically increase risk appetite among investors. Cheaper borrowing costs push more capital into speculative assets like cryptocurrencies.

Fidelity Investments’ director of global macro Jurrien Timmer said Bitcoin has underperformed stock markets this year. However, he noted the cryptocurrency market appears to be maturing compared to previous cycles.

The U.S. dollar index dropped to its weakest level since mid-October. This helped precious metals rally, with silver surging 5% to a fresh all-time high of $64 per ounce.