Bitcoin, XRP, and Dogecoin Drop Sharply Following Federal Reserve Rate Cuts

Bitcoin, Ethereum, XRP, and Dogecoin all experienced sharp declines after Federal Reserve Chair Jerome Powell announced a planned interest rate cut. This news led investors to shift away from "risk-on" assets like crypto and U.S. equities, as expectations grew that the central bank would not cut rates aggressively in 2025. Bitcoin dropped nearly 5%, falling to $101,430 after reaching an all-time high of over $108,000. XRP fell 10%, and Dogecoin dropped 9%, hitting its lowest price in a month at $0.363.

Bitcoin and other cryptocurrencies have thrived in low-interest-rate environments due to their volatile price movements. After the U.S. Federal Reserve aggressively raised rates in 2022 to curb inflation, Bitcoin became less attractive. However, the market has since shifted, and Bitcoin reached a new all-time high above $108,000 on Tuesday, marking its third consecutive day of record prices. Additionally, President-elect Donald Trump and other Republicans have suggested that the U.S. could hold Bitcoin in a strategic reserve.

When asked about the possibility of the Federal Reserve holding Bitcoin, Jerome Powell stated on Wednesday that the Fed is "not allowed to own Bitcoin" and is "not looking for a law change."