Bitcoin price falls under $90,000 — Why is the Fed’s hawkish rate cut crashing Bitcoin again?

In a stunning reversal, as the cryptocurrency market reels from the U.S. Federal Reserve’s latest policy move. Just when investors thought rate cuts would fuel a risk-on rally, the Fed’s has triggered a sharp sell-off, wiping out billions in market cap. Bitcoin (BTC) plunged below the psychologically important $90,000 level, with over $250 million in long positions liquidated in mere hours. What’s driving this crash, and can Bitcoin bounce back? Let’s break it down.

The Fed’s Hawkish 25 bps Rate Cut: A Double-Edged Sword

The Federal Reserve delivered its third consecutive rate cut, trimming the federal funds rate by 25 basis points to a range of 4.25%-4.50%. On the surface, this sounds bullish for assets like Bitcoin, which thrive in low-interest-rate environments. Lower rates reduce borrowing costs, encourage spending, and boost speculative investments in crypto.

However, Fed Chair Jerome Powell’s commentary turned hawkish. He signaled that future cuts would be data-dependent and potentially slower than expected. Phrases like “no rush for more cuts” and hints at persistent inflation raised red flags. Markets interpreted this as a pivot toward a “higher for longer” stance on rates, crushing hopes for aggressive easing.

• Key Fed Signals: Inflation remains sticky above 2% target.
• Strong U.S. jobs data reduces urgency for deep cuts.
• Balanced risks but vigilance on economic overheating.

This hawkish tilt shifted investor sentiment from euphoria to caution, prompting a flight to safety. Traditional markets felt the heat too—U.S. stock futures tumbled, with the Dow, S&P 500, and Nasdaq all flashing red.

Bitcoin’s Sharp Decline: Liquidations and Panic Selling

Bitcoin dropped over 5% in hours, breaching $90,000 and testing $88,000 lows. The cascade began with leveraged traders: $250 million in long liquidations hit exchanges like Binance and Bybit, amplifying the downside momentum.

Why so brutal? High leverage in crypto derivatives markets means small price wicks trigger massive forced sales. As BTC slipped below key moving averages, stop-loss orders piled up, creating a self-fulfilling prophecy.

Bitcoin’s daily chart highlights the rapid plunge post-Fed announcement.

Technical Indicators Signal Caution

Bitcoin’s Relative Strength Index (RSI) on the daily chart has sunk to 44, entering oversold territory. This suggests selling exhaustion could lead to a short-term rebound. However, the MACD shows bearish divergence, and the 50-day EMA at $92,500 now acts as resistance.

If Bitcoin holds $85,569, a relief rally to $94,000 is possible. A break below could mean deeper pain toward $80,000.

Whale Activity and ETF Flows: Mixed Signals

Amid the chaos, on-chain data offers glimmers of hope. Large whales (holders of 1,000+ BTC) have reduced exchange deposits by 15% over the past week, signaling less selling pressure. These big players are accumulating during dips, a classic bullish pattern.

Spot Bitcoin ETFs saw $220 million in inflows yesterday, led by BlackRock’s IBIT and Fidelity’s FBTC. This institutional buying acts as a floor, countering retail panic.

“Whale accumulation during fear phases has historically preceded Bitcoin rallies. ETFs are the new safety net for BTC price.”

Broader Market Context: Risk-Off Rules the Day

The Fed’s tone rippled across assets. Tech stocks like Oracle and Nvidia cratered on AI spending fears, dragging Nasdaq lower. Gold dipped despite safe-haven status, and even silver rumors around JPMorgan couldn’t spark a rally.

Bitcoin’s correlation with stocks remains high at 0.65, making it vulnerable to macro shocks. Geopolitical tensions and U.S. election aftermath add volatility, but long-term drivers like halvings and adoption persist.

What’s Next? Bitcoin Price Prediction and Trading Strategy

Short-term: Watch for a bounce if RSI climbs above 50 and volume picks up. A reclaim of $94,253 opens doors to $100,000.

Medium-term: Fed’s December meeting could clarify path. If data softens, expect dovish pivot and BTC surge.

1. Bull Case: ETF inflows accelerate, whales HODL, rate cut cycle resumes → $110,000 by year-end.
2. Bear Case: Recession fears mount, liquidations cascade → Test $75,000 lows.
3. Base Case: Sideways grind $85k-$95k until macro clarity.

Traders: Use tight stops below $85,500. Long-term holders: Dips like this are buying opportunities—Bitcoin has rebounded from worse.

Final Thoughts: Opportunity in the Chaos

The may have crashed Bitcoin again, but history shows crypto thrives post-Fed pivots. With solid fundamentals—record ETF demand, whale accumulation, and shrinking supply— could mark the bottom. Stay vigilant, manage risk, and position for the rebound. What do you think—buy the dip or wait? Share in the comments.

Related Reads:

• Bitcoin Halving 2024: Impact on Price
• Top Crypto ETFs to Watch in 2025
• Fed Rate Cuts: Winners and Losers