Bitcoin Drops as U.S. Federal Reserve Delivers Smaller-Than-Expected Rate Cut

Bitcoin’s price saw a sharp decline following the latest U.S. Federal Reserve interest-rate decision, slipping more than $2,000 in the past 24 hours. The asset briefly fell an additional $500 within minutes of the announcement, before bouncing back slightly.

The Fed confirmed a 25-basis-point (0.25%) rate cut, marking its third rate reduction of the year. Chair Jerome Powell also noted that policymakers expect one additional cut in 2026, offering some guidance on the longer-term outlook.

 

Market Expected a Bigger Cut

Traders appeared to be pricing in a more aggressive 50-basis-point cut, which did not materialize. This mismatch triggered the choppy, fast-moving price action seen immediately after the announcement.

Data from prediction platform Polymarket showed market expectations were extremely high, with the probability of any rate cut reaching nearly 99% ahead of the Fed’s press conference. Because of this, much of the event was already priced in.

Crypto Market Volatility Remains Elevated

The reaction comes during a period of intense volatility across the cryptocurrency market. Just one day earlier, Bitcoin surged over $4,000 within minutes, pushing above $94,600 before pulling back.

Altcoins followed closely. Ethereum (ETH) led the move, surging about 9% over the last 24 hours and outperforming most major cryptocurrencies.

Institutional Analysts See a Healthier Market Structure

Earlier this week, Coinbase Institutional suggested that Bitcoin and the broader crypto market may be setting up for a rally later in the month. Their reasoning centers around the platform’s “systemic leverage ratio”—a metric that monitors speculative trading behavior.

This ratio has dropped from 10% during the summer to around 4–5% today, indicating that excessive leverage and speculation have been flushed out of the market. According to Coinbase, this creates a more stable and healthier foundation for price growth moving forward.

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