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(Bloomberg) -- Bitcoin sank the most in more than three months, part of a wider retreat in speculative investments after the Federal Reserve signaled greater caution about the scope for future interest-rate reductions.
The more than 5% drop on Wednesday pushed the largest digital asset toward $100,000, a closely watched level. Bitcoin changed hands at $100,230 as of 7:51 a.m. Thursday in Singapore, while other major tokens such as Ether, XRP and meme-crowd favorite Dogecoin also struggled.
Fed officials lowered borrowing costs for a third consecutive time, but reined in the number of cuts they expect in 2025. Chair Jerome Powell said more progress is needed on inflation before making further rate reductions.
The result of the Fed meeting shouldn’t have surprised investors watching “the recent run of warm US inflation and activity data,” IG Australia Pty Market Analyst Tony Sycamore wrote in a note. “However, it has served as the catalyst to wash away some of the speculative excesses that flowed into risk assets, including stocks and Bitcoin, following the US election,” he said.
A dollar gauge surged while global stocks and bonds slid following the Fed decision. A spat over a funding bill added to nerves by raising the risk of a partial US government shutdown. US equity futures wavered early Thursday.
Bitcoin is up 50% since the Nov. 5 election and hit a record high of $108,316 earlier this week, buoyed by President-elect Donald Trump’s pledge to unfetter crypto in the US from regulatory shackles. The Republican has also backed the idea of creating a national strategic stockpile of the original cryptocurrency.
“All signs point to a good floor and outlook for Bitcoin” even if some traders were disappointed about the Fed meeting and took profits, said Paul Veradittakit, a managing partner at Pantera Capital.
Trump’s embrace of crypto has overshadowed warnings about stretched momentum and the lack of any traditional valuation tethers. President Joe Biden’s outgoing administration imposed a clampdown on the industry in the wake of a deep market rout in 2022 that exposed risky practices and fraud.
--With assistance from Olga Kharif.
