Key Takeaways

• The Fed’s 25 bps rate cut on Dec. 10 failed to lift the crypto market.

• Instead, Bitcoin, Ethereum, and major altcoins plunged within hours of the announcement.

• Hawkish messaging from Fed Chair Jerome Powell overshadowed the rate cut and fueled risk-off sentiment.

The Federal Reserve delivered a widely expected 25-basis-point (bps) rate cut on Tuesday, lowering the federal funds target to 3.50%–3.75%.

It was the central bank’s third cut of 2025 and the sixth since late 2024, another step in what many hoped would become a sustained easing cycle.

But if the crypto market was waiting for relief, it didn’t show it. Within hours of the announcement, Bitcoin and Ethereum erased their three-day rebound, triggering a sharp sell-off that caught many traders off guard.

Instead of acting as a catalyst, the rate cut became the spark for another downturn.

A Rate Cut That Went Nowhere

Lower interest rates typically mean cheaper borrowing, increased liquidity, and a greater appetite for speculative assets.

In past cycles, crypto has responded quickly, often violently, to Fed easing.

But 2025 has broken that pattern.

Each of this year’s cuts has been met with a muted or outright negative response from digital assets. Tuesday was no exception.

Bitcoin briefly pushed above $94,000 going into the announcement, only to reverse sharply and fall below $90,000 in the hours that followed.

Ethereum slid more than 4% to under $3,200. Altcoins followed with 2%-5% pullbacks.

By the end of the day, more than $1 billion in leveraged crypto positions had been liquidated, echoing the fast, mechanical sell-offs that have punctuated this quarter’s volatility.

The downturn wiped out much of the sector’s early-December rebound.

Bitcoin ended the 24-hour window down 2.6%, extending its month-long decline to more than 15%.

Why the Market Reacted Negatively to Good News

The problem wasn’t the cut—it was everything around it.

In his press conference, Fed Chair Jerome Powell leaned heavily on caution.

Inflation risks “remained,” and the central bank signaled only one more cut in 2026. Analysts who had been quietly hoping for a 50 bps move, or at least a dovish surprise, got neither.

That mismatch between expectations and reality is what hit crypto hardest.

Markets had already factored in a 25 bps cut. What they wanted was confidence. What they got was restraint.

Options flow reflected the mood shift quickly: traders lifted the probability of BTC ending the year below $80,000 to roughly 15%, a noticeable jump from earlier in the week.

As traders rushed to unwind risky positions, domino-style liquidations accelerated the slide.