Bitcoin experienced a sharp decline, dropping nearly 6% to trade under $100,000 amidst a market-wide sell-off triggered by the Federal Reserve’s unexpectedly hawkish tone during Wednesday’s FOMC meeting, according to data from CoinGecko.

The Federal Reserve reduced its benchmark interest rate by 25 basis points, aligning with expectations. However, the Fed also revised its projections, signaling only two rate cuts in 2025, down from its previous forecast of four. Fed Chair Jerome Powell emphasized a cautious approach to future policy adjustments, stating that the central bank remains vigilant about inflation risks.

The Fed’s stance has led analysts to revise their forecasts for rate cuts. Morgan Stanley’s analysts now predict no rate reductions in January 2025, reflecting the shift in market sentiment.

Similarly, market data from the CME FedWatch Tool reveals a significant change in expectations for the Fed’s January meeting. The probability of a rate cut has plummeted to 8.6%, while the likelihood of maintaining the current rate has surged to 91% from 81% just a day earlier.

The financial markets, including both stock and cryptocurrency sectors, reacted strongly to Powell’s hawkish signals. The Nasdaq dropped over 3%, and the Dow Jones recorded its longest losing streak in half a century. Meanwhile, the U.S. dollar hit a two-year high as bond yields climbed across the curve.

Bitcoin saw a sharp intraday loss of $5,000 during Powell’s speech, falling to $98,900 before recovering slightly to trade above the $100,000 mark later in the evening. The decline wasn’t limited to Bitcoin, as major altcoins faced significant losses. Ethereum dropped over 5% to $3,600, Ripple slid nearly 9%, and Dogecoin fell by 8%, according to CoinGecko data.

Meme tokens suffered the most dramatic declines over the past 24 hours. Popcat (POPCAT) plunged 20%, while Peanut the Squirrel (PNUT) fell by 19%. Other meme-based cryptocurrencies, including Pepe (PEPE), Dogwifhat (WIF), Bonk (BONK), and Floki (FLOKI), also recorded double-digit percentage losses.

This wave of market volatility highlights the sensitivity of both traditional and digital asset markets to the Federal Reserve’s policy decisions. As the crypto market struggles to stabilize, investors are closely monitoring macroeconomic signals for indications of future trends.

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