On December 10, the US Fed rate cut crypto interest rates, lowering the benchmark interest rates, but instead of celebrating, the crypto market saw an immediate drop.
The reaction drove digital assets traders to re-evaluate future money supply conditions, ignoring the rally seen in traditional stock markets, which are more sensitive to Bitcoin (BTC) federal reserve policies.
The Federal Reserve was essentially going to create a more accommodative economic environment, which has historically been a catalyst for growth in speculative assets, such as cryptocurrencies.
But this time, the expected rally simply did not materialize.
The decline in the crypto market, contrasted with rising records in the Standard & Poor (S&P 500), close up 0.67% and Nasdaq indices.
What was once a durable narrative, that Bitcoin is a basic border against inflation or “easy money” policy, is now being inspected at an unprecedented intensity by traders that look at the technical details and the influence of the feds cryptocurrency policies.
The muted response to the change in Bitcoin interest rates highlights a deeper identity crisis for such assets.
Sellers Controlling the Narrative
The technology underpinning major digital currencies is making a very clear indication of vulnerability.
For Bitcoin, valued at $89,977 as of time of writing, it appears that its valuation dynamics have shown a conclusive indication of a jump being a mere peak in a larger decline, being a bearish market since peaking in October at $126,000.
The struggle persists, despite a less tight monetary environment established by Federal Reserve policies on cryptocurrency.
A glance at some important technical indicators shows why this is a bleeding market.
The most important indicator is probably the Death Cross pertaining to the Exponential Moving Averages in Bitcoin.
A Death Cross happens when the smaller 50 day moving price average drops below the larger 200-day average, which is a significant indication of looming bearish sentiment.
Currently, Bitcoin is trading far below both indicators, which not only reinforces a prevailing trend but defies conventional behavior in a lowering interest rate on bitcoin atmosphere.
The Relative Strength Index (RSI), an indexer of momentum pricing, is at 44.23. And with this being below 50, it can be perceived that selling pressure dominates over purchase pressure in Bitcoin, which is a sure indication in a bearish market, but not in an “oversold” market where more buyers gather in when it’s below 30.
Yet, weak momentum persists, despite Fed rate cut crypto interest decision.
The Average Directional Index (ADX) stands at 28.15 and given that reading above 25 verifies a strong trend, this verifies that this downtrend is a serious one and that sellers are in control. The fact that a major rally is yet to be witnessed verifies that the feds cryptocurrency interest rates decisions have not injected sufficient momentum.
Ethereum Struggles While Long-Term Support Remains
The case with Ethereum (ETH) is even more challenging, falling 4.40% to $3,178.8, coming as it formed a Golden Cross – the reverse of a Death Cross and a positive sentiment indicator. Yet, it was unable to break above its 200-day Exponential Moving Average (EMA).
The technical failure means that despite a momentary show of strength, long-term selling pressure remains, raising questions about feds cryptocurrency future liquidity impact.
The lack of correlation between the Federal Reserve’s policy and the short-term bitcoin interest rate response is a major matter.
Despite an immediate price crash, a strong level of faith persists among crypto investors. The hope can be observed in predicting markets, such as “Myriad,” which shows a disconnect between immediate market trends and investor confidence, including in crypto federal reserve interaction with monetary policy.
“Crypto Winter is coming,” says a market trader, but they are betting 90% odds on “no,” which means they realize volatility is working out some twists, but they believe in the future of crypto currencies. The market remains to see what effects BTC federal reserve policies will have in the end.
Such optimism remains in place despite present market performance, which trails the Fed rate cut crypto interest rates decision. Such a challenge presents a crossroads for the crypto market.
A failure for Bitcoin to register meaningful gains in a setting where it was “tailor-made,” in terms of lower interest rates and persistent inflation, such as in the Bitcoin inflation rate seen in 2025, will thus see this crypto’s status called into question in terms of being an economic hedge at a fundamental level.
The present level of interest rate reduction indicated by the Fed rate cut crypto interest rates shows that this is not currently being considered a safe haven at this present level, due to uncertainty surrounding federal reserve cryptocurrency regulation.
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