Bitcoin Retreats as Fed’s Hawkish Stance and Powell’s Comments Weigh on Sentiment

Bitcoin extended its decline on Thursday, retreating 2.6% to $101,153.0 by 01:08 ET (06:09 GMT), as the U.S. Federal Reserve’s hawkish tone dampened risk appetite. The cryptocurrency briefly dipped below the $100,000 mark during the session, marking a sharp pullback from its all-time high of $108,244.9 reached earlier this week.

The Federal Reserve reduced interest rates by 25 basis points as expected but signaled a significantly slower pace of cuts in 2025. Policymakers projected only two rate reductions next year, down from previous expectations of four, signaling a prolonged period of higher borrowing costs. This more cautious outlook curbed liquidity in financial markets, making speculative assets like cryptocurrencies less attractive.

Fed Chair Powell Rules Out Bitcoin Accumulation by the Central Bank
Adding to the bearish sentiment, Federal Reserve Chair Jerome Powell dismissed the notion of the central bank stockpiling Bitcoin. During a press briefing, Powell stated that accumulating large amounts of Bitcoin is not within the Fed’s purview and would require congressional approval. His comments coincided with speculation about the incoming Trump administration’s proposal for a Strategic Bitcoin Reserve, which has already faced skepticism over regulatory feasibility.

Powell’s remarks compounded doubts about the viability of such a reserve, despite President-elect Donald Trump raising the possibility last week. The lack of concrete details regarding the plan has further weighed on market sentiment.

El Salvador’s Bitcoin Reversal Amid IMF Deal
Elsewhere, El Salvador’s President Nayib Bukele scaled back his push to make Bitcoin a national currency as part of negotiations for a $1.4 billion loan from the International Monetary Fund (IMF). This move marks a departure from Bukele’s earlier ambitions, which included adopting Bitcoin as legal tender in 2021 and issuing Bitcoin-backed bonds.

While El Salvador has temporarily shelved its Bitcoin-related projects, the country has benefited from the recent surge in Bitcoin prices, boosting the valuation of its existing crypto holdings.

Altcoins Follow Bitcoin’s Decline
The Federal Reserve’s hawkish outlook also weighed on altcoins, which extended their losses for the second consecutive day.

• Ether (ETH) fell 4.7% to $3,684.62.
• XRP tumbled 5.6% to $2.3701.
• Solana (SOL) slipped 2.5%, while Polygon (MATIC) dropped 6%.
• Cardano (ADA) fell over 4%, and meme token Dogecoin (DOGE) lost 5.6%.

With risk appetite subdued, cryptocurrencies remain under pressure, reflecting the broader downturn in speculative assets. Investors are likely to remain cautious as they navigate the uncertain monetary policy landscape.