TLDR
- Bitcoin spiked above $94,000 then retreated to $92,000 after the Fed cut rates by 25 basis points on Wednesday
- Fed Chair Jerome Powell signaled concern about the labor market while noting inflation remains a problem
- The Fed will purchase $40 billion in short-term Treasury bills over the next month starting Friday
- Two FOMC members voted against the rate cut, showing disagreement within the committee
- Stock futures fell after hours with Nasdaq futures down 1.3% as Oracle dropped 10% on weak earnings
The Federal Reserve cut interest rates by 25 basis points on Wednesday, sending Bitcoin and stock markets on a volatile ride. Bitcoin initially jumped to $94,400 before falling back to around $92,000, down 0.8% over 24 hours.
The rate cut lowered the federal funds target range to 3.5% to 3.75%. This marks the third rate reduction by the Fed this year. The decision was not unanimous, with two FOMC members voting against the cut.
BREAKING: The US Federal Reserve officially cuts interest rates by 25 basis points in their third interest rate cut of 2025.
— The Kobeissi Letter (@KobeissiLetter) December 10, 2025
Fed Chair Jerome Powell delivered mixed signals during his post-meeting press conference. He pointed to a labor market that might be weaker than previously expected. At the same time, he warned that the fight against inflation is far from finished.
“We’re well positioned to wait and see” about future rate cuts, Powell told reporters. He said Fed policy is now “within a range of plausible estimates of neutral” and positions the central bank well for future decisions.
Treasury Purchases Signal Shift in Fed Strategy
The New York Fed announced it will begin purchasing short-term Treasury bills starting Friday. The central bank plans to buy around $40 billion in securities over the next month. These purchases will target Treasury bills and securities with up to 3 years remaining maturity.
Powell said the purchases will stay “elevated” for several months. This represents a change from the past three years when the Fed reduced its balance sheet. The move aims to ease financial conditions without starting full quantitative easing.
Stock markets closed higher Wednesday following the announcement. The S&P 500 gained 0.7% while the Nasdaq rose 0.5%. The dollar fell about 0.6% against the yen, euro, and British pound.
After-Hours Trading Shows Market Uncertainty
Stock futures turned negative in after-hours trading Wednesday night. Nasdaq 100 futures dropped 1.3% while S&P 500 futures fell 0.9%. Dow Jones futures declined 0.4%.
Oracle stock plunged more than 10% after reporting revenue below expectations. The software company’s weak cloud-infrastructure numbers dampened the positive mood from earlier trading. The miss raised fresh concerns about demand in the tech sector.
Ethereum showed relative strength compared to Bitcoin. ETH traded above $3,300, gaining 1.1% over 24 hours. Other major cryptocurrencies also experienced volatility following the Fed announcement.
Analysts from Capital.com noted the Fed made clear this cut does not start an aggressive easing cycle. Future moves will depend heavily on incoming inflation and labor market data. The updated communication from the Fed stressed caution about further cuts.
Brian Coulton, chief economist at Fitch Ratings, said it seems unlikely rates will continue falling at sequential meetings. Fitch now expects just two more cuts by June 2026, which would take the Fed funds rate to 3.25%.
David Hernandez from 21Shares said Bitcoin needs fresh momentum to break through resistance at $94,500. He noted that if spot ETF inflows strengthen as the cost of capital falls, Bitcoin could push back above $100,000.
Powell acknowledged a great deal of data will arrive before the Fed’s next meeting in January. This information will influence how the central bank moves forward with policy decisions. Powell also said a rate hike would be off the table while talking up the US economy’s strength.
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