Bitcoin Drops. Why Powell’s December Warning Is Spooking Cryptos.

The total market value of all cryptocurrencies is around $3.8 trillion. (Dreamstime)

Key Points

• Bitcoin and other cryptocurrencies declined following the Federal Reserve’s rate cut and Chairman Powell’s comments on future rate decisions.
• Major cryptocurrencies experienced drops, with Bitcoin falling nearly 3% to around $110,830, Ethereum down 4.6%, and Dogecoin losing nearly 4%.
• Wider market sentiment, including US-China trade talks and upcoming tech earnings, is expected to influence crypto prices and increase volatility.

Bitcoin and other cryptocurrencies fell on Wednesday as investors focused on the Federal Reserve, U.S.-China trade talks, and coming earnings.

Following the Fed’s rate cut on Wednesday afternoon, the price of Bitcoin was down nearly 3% over the past 24 hours, at around $110,830. Several large altcoins were falling: Ethereum dropped 4.6%, XRP dipped 2.3%, and Solana was down 2.9%. Dogecoin , which is a memecoin, lost nearly 4%.

The crypto selloff picked up steam after Fed chairman Jerome Powell said in his press conference that another interest-rate cut in December “is not a foregone conclusion.”

Cryptos, much like stocks, have surged this year thanks to the hope of lower rates. The promise of further deregulation in the industry and more crypto-friendly policies by the Trump administration have helped, too.

There is no denying that crypto has gotten a big lift from rate cuts and the prospect of a decline in inflationary pressures. That has also helped fuel the epic rally in gold this year. Both gold and cryptos have benefited from a weaker dollar —but the greenback moved higher Wednesday. Ff the Fed doesn’t cut rates again in December, the dollar could finally regain some steam. That wouldn’t be good news for Bitcoin bulls.

Crypto prices are also likely to be affected by wider market sentiment. President Donald Trump said he expects to reach a trade deal with China when he meets Chinese President Xi Jinping on Thursday. Meanwhile, multiple large technology companies will report earnings this week.

“Options-derived implied moves for US equity indices see significant tilts around the coming AI-related earnings and US macroeconomic releases over the next few weeks. What crypto investors should do is brace for volatility,” wrote Manuel Villegas, an analyst at Julius Baer, in a research note.

Major crypto-exposed stocks were down modestly. Strategy, the largest corporate holder of Bitcoin in the world, was down 2% in late afternoon trading. The U.S. crypto exchange Coinbase Global, which will report its latest earnings on Thursday, was slightly lower.

However, shares of Strive, the Bitcoin treasury company co-founded by Vivek Ramaswamy and known for railing against “woke” corporate policies, plunged 12%, continuing to retreat after gaining 49% on Monday.

Strive began surging late last week. The rally accelerated Friday after Bitcoin investor Mike Alfred said in a post on X that he had taken a stake of more than a million shares in the company.

Write to Adam Clark at adam.clark@barrons.com and Paul R. La Monica at paul.lamonica@barrons.com.