Why Bitcoin Is Sliding Even After the Fed Cut Rates
Bitcoin is drifting lower even after the U.S. Federal Reserve delivered a widely anticipated 25 basis point interest rate cut on Wednesday—a move that, in theory, should favor risk assets like crypto. Instead of rallying, BTC slipped about 2% over the last 24 hours and is trading just below the 90,000 mark, confounding traders who expected cheaper money to translate into fresh upside.
The core reason: the cut was almost entirely priced in, and markets are now looking beyond the headline move to a murkier macro picture—sticky inflation, uncertainty about the future pace of policy easing, and rising political risk as the 2026 election cycle approaches.
John Haar, managing director at Bitcoin-focused financial services firm Swan Bitcoin, noted that the Fed’s messaging did little to calm those concerns. “Fed officials used hedged language as they analyzed economic growth, inflation, unemployment, and the potential path of interest rates,” he said. In other words, while the central bank delivered the cut everyone expected, it stopped short of offering a clear, dovish roadmap for aggressive easing ahead.
Haar also pointed to a less-discussed but significant development: the central bank’s renewed balance sheet expansion. According to him, the Fed’s latest “reserve management purchases” of short-term Treasury bills—about 40 billion dollars over the next 30 days—mark “the Fed’s first balance sheet expansion since it began quantitative tightening in mid‑2022, except for the March 2023 banking crisis.” On paper, more liquidity and a larger balance sheet should support financial assets. But the fact that this is happening against the backdrop of persistent inflation and slower growth signals a more complicated, late‑cycle environment rather than a straightforward boom.
Ordinarily, lower interest rates reduce borrowing costs, encourage leverage, and diminish the appeal of cash and bonds. That combination is typically supportive of higher‑risk assets including tech equities and cryptocurrencies. Yet markets rarely move on what is “textbook”; they move on what is surprising. Because traders had been expecting this 25-basis-point cut for weeks, if not months, the announcement itself was more of a confirmation than a catalyst. Once the event hit, short‑term speculators who had accumulated Bitcoin in anticipation of a dovish outcome started locking in profits, turning a “buy the rumor” phase into a “sell the news” reaction.
Another drag on Bitcoin is the market’s reassessment of how far and how fast the Fed can really go from here. While the central bank signaled willingness to support growth, it also acknowledged that inflation has not yet been fully tamed. Persistent or “sticky” inflation limits the room for aggressive cuts. If investors suspect the Fed may be forced to slow or pause its easing cycle to avoid reigniting price pressures, the bullish case for an extended risk‑asset rally becomes less compelling. That uncertainty feeds directly into Bitcoin’s current weakness.
Longer‑term political risk is adding another layer of caution. With the 2026 election cycle on the horizon, investors are already starting to factor in potential shifts in fiscal policy, regulation, and geopolitical posture. For Bitcoin, that could mean anything from tighter oversight of crypto markets to changes in how capital gains and digital asset holdings are taxed. Even if these risks are still distant, markets are forward‑looking; rising political noise tends to translate into higher risk premiums and lower appetite for speculative positions.
There is also the issue of positioning. After a strong multi‑month rally that took Bitcoin to fresh highs, many large holders and institutional traders are sitting on substantial unrealized gains. When a widely telegraphed macro event finally lands—with no positive surprise attached—it often becomes a trigger for rebalancing. Funds may reduce exposure to Bitcoin and other volatile assets, rotate into safer instruments, or simply raise cash in anticipation of choppier markets. That selling pressure can be enough to push prices lower even in the face of seemingly bullish economic news.
Short‑term technical factors are reinforcing the move. As spot prices dip below key intraday support levels, algorithmic trading strategies and leveraged positions can accelerate the decline. Liquidations of over‑levered longs amplify the downside, creating a self‑reinforcing loop: falling prices trigger margin calls, margin calls force more selling, and that selling pushes prices down further, independent of any new macro information.
At the same time, Bitcoin’s role as “digital gold” is undergoing a quiet stress test. In theory, a world of expanding central bank balance sheets and structurally higher inflation should play directly into the narrative of Bitcoin as a hedge against fiat debasement. In practice, however, Bitcoin still trades more like a high‑beta risk asset most of the time—moving in sympathy with growth stocks rather than with traditional safe havens. This tension explains why, in periods of macro uncertainty, Bitcoin can fall even when the long‑term monetary backdrop appears favorable to its core thesis.
Another nuance is that many professional investors now treat Bitcoin as part of a broader macro portfolio, not as an isolated bet. When volatility rises in bonds or currencies, or when credit spreads widen, managers often respond by cutting risk across the board. Bitcoin, being liquid and easy to trade, can be one of the first assets to be trimmed—even if the fundamental case for it hasn’t changed dramatically. That cross‑asset risk management behavior is invisible on the price chart but plays a crucial role in explaining short‑term moves.
Looking forward, much will depend on how the macro data evolves over the coming months. If inflation cools more decisively and economic growth stabilizes, the Fed could be in a position to cut more confidently, supporting both traditional markets and crypto. Under that scenario, the current pullback in Bitcoin could be remembered as a temporary shakeout. On the other hand, if price pressures remain uncomfortably high or growth stumbles, policymakers may be forced into a more cautious stance. That would likely keep Bitcoin in a volatile, news‑driven trading range rather than setting it up for an immediate, sustained breakout.
For long‑term holders, the current environment underlines a recurring lesson: central bank moves are only one piece of the puzzle. Market expectations, political cycles, regulatory uncertainty, and global risk sentiment can all override what might look, on the surface, like bullish monetary policy. While cheaper money and a growing Fed balance sheet might eventually provide a tailwind, they do not guarantee a straight‑line rally—especially when everyone saw the rate cut coming.