Crypto Markets Dip as Fed Signals Patience on Rate Cuts

The cryptocurrency market continued its downward trend on Friday as Federal Reserve Chair Jerome Powell signaled a cautious approach to further rate cuts.

Bitcoin (BTC) fell 2.2% in the past 24 hours, trading at $89,168, while Ethereum (ETH) and Solana (SOL) dipped 3%. The global cryptocurrency market cap now stands at $3.09 trillion.

Over the past 24 hours, crypto liquidations totaled $511.5 million, impacting more than 176,000 traders. Of this, $350 million came from long positions, where investors bet on the price of an asset rising.

Speaking at a business event in Dallas, Powell noted, “The economy is not sending any signals that we need to be in a hurry to lower rates. The strength we are currently seeing gives us the ability to approach our decisions carefully.”

The Fed has already cut rates twice, but Powell’s comments suggest further reductions may take a backseat as the central bank monitors economic performance.

Larry Summers, former U.S. Treasury Secretary, expressed concerns over Trump’s plans to cut taxes and pressure the Federal Reserve.

“If he carries through on what he said during his campaign, there will be an inflation shock significantly greater than the one the country suffered in 2021,” Summers said on CNN News Central.

Bitcoin’s Decoupling From Gold

Bitcoin’s recent rally marks a clear break from its traditional correlation with gold.

According to K33 Research, the 30-day correlation between Bitcoin and gold has dropped to -0.36, the lowest in nearly a year. This shift comes as Bitcoin surged toward $90,000 while gold prices declined, suggesting investors are leaning toward BTC as a preferred store of value.

Spot gold was flat at $2,566 per ounce after dropping more than 4% this week to its lowest level since Sept. 12 on Thursday.

Analysts attribute this divergence to expectations around President-elect Donald Trump’s economic policies, which are anticipated to bring regulatory clarity to the crypto market.

“We believe that the underlying strength in BTC represents a systematic shift in the market in anticipation of Trump’s return to office,” said trading firm QCP Capital. “His idea of launching a strategic BTC reserve and rotation from Gold to BTC provides a strong narrative that keeps BTC prices supported.”

The firm projects Bitcoin could reach between $100,000 and $120,000 in the near future.

Bitcoin ETFs Face Major Outflows

Meanwhile, U.S. Bitcoin exchange-traded funds (ETFs) recorded their third-largest single-day outflow since their inception.

On Nov. 14, Bitcoin ETFs logged a combined $401 million in outflows, according to Farside Investors data.

Notably, Fidelity’s Wise Origin Bitcoin Trust (FBTC) led with $179 million, followed by Bitwise’s Bitcoin Strategy Optimum Yield Fund (BITB) at $114 million and Ark Invest’s ARK Next Generation Internet ETF (ARKB), which shed $162 million.

However, BlackRock’s iShares Bitcoin Trust (IBIT) bucked the trend, attracting $126 million in inflows.