Image credit: The Byteline

Bitcoin briefly dropped below $100,000 on Thursday following the U.S. Federal Reserve’s cautious stance on future interest-rate cuts, which dampened speculative investment sentiment.

The cryptocurrency hit a low of $98,760, roughly $10,000 short of its record high earlier this week, before recovering to six figures. Other tokens, including Ether and Dogecoin, also faced headwinds.

The Federal Reserve lowered interest rates for the third consecutive time but signaled a slowdown in cuts for 2025. Fed Chair Jerome Powell emphasized that more progress on inflation is required before easing monetary policy further, weighing heavily on risk assets, including Bitcoin and stocks.

Market Analyst Tony Sycamore from IG Australia noted that the Fed’s decision wasn’t unexpected, given recent inflation and economic data. However, it triggered a correction in speculative assets, including cryptocurrencies, following gains driven by the U.S. election.

Despite the volatility, Bitcoin remains up 50% since the Nov. 5 U.S. election, buoyed by President-elect Donald Trump’s pro-crypto stance, including promises to reduce regulatory burdens on the industry and explore a national Bitcoin reserve.

Paul Veradittakit, managing partner at Pantera Capital, remained optimistic, stating, “All signs point to a good floor and outlook for Bitcoin,” even as some traders cashed in profits post-Fed announcement.

However, concerns persist about Bitcoin’s momentum and the absence of traditional valuation metrics. The Biden administration’s clampdown on crypto in 2022, after a market rout exposed fraudulent practices, contrasts sharply with Trump’s more crypto-friendly approach.

Traders are also preparing for potential short-term declines. Sean McNulty of Arbelos Markets reported increased demand for options to hedge against Bitcoin dips, with Revo Digital's Zann Kwan predicting a possible brief retreat to the low $90,000s.

By Thursday morning (UK time), Bitcoin had bounced back to above $101,000, signaling resilience amid a volatile market environment.

‍