Why Bitcoin Fell After the Fed’s Rate Cut Announcement
Bitcoin dropped after the Fed’s rate cut due to fewer planned cuts in 2026 and the Fed’s return to T-bill purchases.
Bitcoin slipped to around $90,200 on Wednesday despite the Federal Reserve lowering interest rates by 25 basis points. Traders had expected the cut to offer some support, but the move did little to lift sentiment, and Bitcoin continued to lose ground.
Fed T-Bill Buying Becomes the Key Detail for Traders
Swan Bitcoin’s John Haar said the part of the Fed meeting that caught trading desks by surprise was not the rate cut itself but the announcement that the central bank will buy about $40 billion in Treasury bills over the next month. The Fed has not added to its balance sheet in a meaningful way since quantitative tightening began in 2022, aside from its brief response to the 2023 banking scare.
Because traders expected liquidity to tighten, the decision to restart T-bill purchases stood out, and many read it as a sign that the Fed wants additional short-term funding in the system.
The Rate Cut Was Already Expected
The cut itself was not the problem. Markets had anticipated the move for weeks, so there was no surprise to drive fresh buying.
Data from Myriad, a prediction platform owned by Decrypt’s parent company, showed sentiment turning more cautious:
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Probability of a “Santa rally” fell to 17%.
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Chances of Bitcoin reaching $100,000 instead of dropping to $69,000 fell by 5 percentage points overnight.
Traders were not waiting for the cut — they had already moved on to what comes next.
Fed Projections for 2026 Pulled Confidence Down
The updated Fed dot plot reduced the number of expected rate cuts in 2026. That detail was one of the main drivers behind Bitcoin’s drop.
Fewer expected cuts means traders now assume:
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borrowing costs may stay higher for longer
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the current easing cycle could slow sooner than hoped
Tim Sun of HashKey Group said Bitcoin fell because traders adjusted to these projections immediately, not because of Wednesday’s cut itself.
Political and Fiscal Shifts in 2026 Are Adding Pressure
Sun also noted that 2026 is a key year in U.S. politics. The midterm elections will take place, and a Trump administration would likely aim for:
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increased federal spending
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a softer stance from the Fed
While that combination may support short-term growth, it often pushes prices higher, which in turn forces long-term interest rates up. When long-term rates climb, assets that rely on abundant liquidity — including Bitcoin — tend to weaken.
AI Infrastructure Costs Limit Room for Fed Rate Cuts
Tim Sun said spending on AI infrastructure has risen sharply, with companies allocating more money to data centers, power supply, and specialized hardware. These projects have kept certain input costs firm, slowing the pace at which prices are easing. If these costs stay high, the Fed may have less room to reduce rates, which has direct implications for assets like Bitcoin.
