Federal Reserve Cuts Interest Rates Again – Bitcoin Shows Muted Reaction Below $100,000

The Federal Reserve has continued its monetary easing and lowered its key interest rate by an additional 25 basis points. The "Federal Funds Rate" now stands in the range of 3.50 to 3.75 percent, marking the lowest level since 2022 ^[1][2]. Since September, the U.S. central bank has been in a rate-cutting cycle following several rate cuts that occurred even before Donald Trump's inauguration ^[1].

Bitcoin Responds with Mixed Signals

Bitcoin's reaction to the rate decision was muted. While the cryptocurrency initially turned positive and rose above $94,000 ^[1], it declined slightly over the course of the day, falling from around $93,700 to $92,618 ^[2]. The Fed's decision prompted a slight but noticeable sense of relief in capital markets ^[1].

Structural Tension in Bitcoin Market

Bitcoin's inability to sustainably break through the $100,000 mark reflects growing structural tension, according to Glassnode: time is working against the bulls ^[3]. The longer the price remains in this fragile range, the more unrealized losses accumulate, increasing the probability of forced selling ^[3].

Relative unrealized losses (30-day average) have risen to 4.4 percent, ending a two-year period below 2 percent ^[3]. This increase signals a transition into a higher-stress environment for market participants. Daily realized losses reached $555 million per day – a level last observed during the FTX capitulation ^[3].

Long-Term Holders Take Profits

Simultaneously, long-term holders with holding periods exceeding one year realized more than $1 billion per day in gains, with a peak of $1.3 billion ^[3]. This dynamic of capitulation by recent buyers and strong profit-taking by long-term holders may have pushed Bitcoin below the important resistance zone between $95,000 and $102,000 ^[3].

Spot Rally Amid Declining Futures Market

Data from CryptoQuant reveal a remarkable divergence: while the Bitcoin price has risen, open interest has declined ^[3]. The current rally is driven primarily by spot demand rather than leverage-based speculation ^[3]. While spot-driven upward movements are generally considered healthy, sustained bullish momentum historically requires increasing leverage positions ^[3].

Outlook on Future Rate Developments

The quarterly "Dot Plot," which reflects Federal Reserve officials' projections for the key interest rate, signals further rate moves ^[1]. Additionally, the Fed ended its balance sheet reduction (quantitative tightening), which had been ongoing since summer 2022, on December 1 ^[1].

Fed Chair Jerome Powell's term ends in May 2026, giving Donald Trump the opportunity to nominate an ally as his successor ^[1]. Trump has already announced he will reveal his nomination in early next year ^[1].