Bitcoin Slips Below $115K as Fed Implements Rate Cut: A ‘Sell the News’ Event?

Fed Cuts Rates, But Bitcoin’s Price Stumbles

The moment crypto traders and investors were waiting for has arrived: the U.S. Federal Reserve has officially pivoted, implementing a long-awaited 25-basis point interest rate cut. Yet, instead of a celebratory rally, Bitcoin (BTC) has shown signs of weakness, struggling to maintain its footing above the critical $115,000 level. The market’s immediate reaction has been surprisingly muted, leaving many to wonder why a positive macroeconomic shift isn’t translating into a price surge.

This article dives into the details behind the Fed’s decision, explores the classic “sell the news” phenomenon playing out, and uncovers the critical divergence between futures and spot markets that could dictate Bitcoin’s next major move.

Understanding the Fed’s Dovish Turn

The Federal Open Market Committee (FOMC) announced its decision to lower the benchmark interest rate by 0.25%, bringing the new range to 4.0%–4.25%. This move signals a significant shift in the central bank’s policy, moving from tightening to easing in an effort to support a cooling economy.

In its official statement, the Fed pointed to several key factors influencing its decision:

• Slowing Job Growth: Job gains have moderated in recent months.
• Rising Unemployment: The unemployment rate has seen a slight uptick.
• Elevated Inflation: While inflation remains a concern, the Fed acknowledged that downside risks to employment are growing, prompting a more accommodative stance.

Further underscoring this dovish sentiment, new projections indicate that an additional 50 basis points of cuts could be on the table through 2025. The move wasn’t unanimous, however. Newly appointed Fed Governor Stephen Miran dissented, advocating for a more aggressive 50-basis point cut, which reinforces the market’s perception that the era of high interest rates is coming to an end.

A Classic ‘Sell the News’ Reaction?

Theoretically, lower interest rates are bullish for risk assets like Bitcoin. They reduce the appeal of holding cash and encourage investment in assets with higher growth potential. So why the sluggish price action?

The most likely explanation is a classic case of “buy the rumor, sell the news.” The interest rate cut was widely anticipated and, for weeks, had likely been priced into the market. Traders who bought BTC in anticipation of the announcement may now be taking profits, creating short-term selling pressure.

While the long-term outlook under a sustained easing cycle remains constructive for crypto, the initial optimism can fade as traders digest the Fed’s cautious tone and weigh ongoing global market uncertainties.

The Hidden Story: Futures Frenzy vs. Spot Scarcity

Perhaps the most telling indicator of the market’s current state lies beneath the surface. A significant divergence has appeared between the derivatives and spot markets, painting a picture of a market driven by speculation rather than organic demand.

Futures Open Interest Surges

Immediately following the FOMC announcement, Bitcoin futures open interest—the total value of outstanding futures contracts—spiked. This indicates that leveraged traders are piling into the market, betting on future price volatility. They are using derivatives to gain exposure without necessarily buying the underlying asset.

Spot Volume Continues to Decline

In stark contrast, aggregated spot volumes have been falling. This means that fewer people are actually buying and selling Bitcoin on exchanges. The lack of strong spot buying pressure suggests that the current price level is not supported by genuine, widespread demand.

This divergence is critical. A market propped up by leverage without a solid foundation of spot buyers is inherently fragile. It becomes vulnerable to sharp price swings and liquidations if sentiment shifts, as leveraged positions can be forced to unwind quickly.

What’s Next for Bitcoin?

The Federal Reserve’s policy shift is a significant long-term tailwind for Bitcoin. However, the immediate price action is a reminder that markets are complex. The current environment, dominated by futures speculation, points toward a period of potential volatility and price consolidation.

For a sustainable move higher, the market needs to see a return of spot buyers. Until then, Bitcoin’s price may remain susceptible to sharp, leverage-driven fluctuations. Traders will be closely watching for an increase in spot volume to confirm whether this dovish pivot can translate into a genuine, lasting bull run.