Powell's policy on the markets: Fed cuts rates while Bitcoin hits new records

Federal Reserve Chair Jerome Powell delivered statements today that are expected to be decisive for the future direction of the U.S. central bank. During a Federal Open Market Committee meeting that resulted in a 25 basis point interest rate cut, bringing rates to the 4.5%-4.75% range, Powell firmly clarified that the recent U.S. elections “have no effect” on monetary policy in the short term. This message dispelled fears of a radical policy shift, reassuring markets about a potential tightening of the Fed’s stance.

What Powell’s speech means for the Fed and markets

Powell’s remarks directly address widespread concerns among market participants. Several observers had speculated that policies proposed by the newly elected president—tax cuts, tariffs, and deregulation—could reignite inflationary pressures, forcing the Fed to adopt a more restrictive stance. Powell’s statement today clarifies that the Fed proceeds based on its economic data, unaffected by political cycles.

The rate cut today is part of a coordinated easing effort worldwide. The Bank of England also cut rates by 25 basis points, while Sweden’s Riksbank eased key rates by half a percentage point. These moves signal a convergence among central banks toward a more accommodative policy, reflecting a perceived slowdown in economic growth risks.

Powell emphasized that despite today’s easing, monetary policy remains overall restrictive. However, downside risks to economic growth have decreased compared to the 50 basis point cut in September. When asked by journalists, the Fed chair also stated he would not resign if asked, and that removing or demoting him from his position would not be permitted under current regulations.

Bitcoin surges to new highs in reaction to Powell’s data

Market reactions to Powell’s statements were immediate and pronounced. Bitcoin rose to $76,951, hitting a new all-time high. Over the next 24 hours, the main cryptocurrency’s price settled around $68,220, up 1.6% in that period.

The CoinDesk 20 index, representing a basket of leading digital assets, significantly outperformed, gaining 4.5% in the same timeframe. U.S. stock indices also performed well, with the S&P 500 and Nasdaq closing up 0.8% and 1.5%, respectively.

Among altcoins, Ethereum reached about $2,060, Solana stood at $87.94, Dogecoin was at $0.10, and Cardano at $0.30. The bullish momentum also boosted stocks related to cryptocurrencies such as Circle, Coinbase, Strategy, and BitMine.

Technical insight: the short squeeze phenomenon

The upward movements were partly driven by a strong short squeeze that shook markets following the rate cut and Powell’s reassurances. The rebound corresponds to the release of selling pressure accumulated over previous weeks.

Analysts like Joel Kruger of LMAX Group see this move mainly as a technical rebound driven by the unwinding of short positions and liquidity constraints, rather than clear fundamental catalysts. This distinction is important for assessing the sustainability of the rally.

Joshua Lim of FalconX noted that some funds are chasing the rally, rotating into highly volatile assets and building exposure through options. This behavior suggests that part of the enthusiasm reflects tactical dynamics rather than a fundamental overhaul.

Technical analysis: key levels for the rally’s continuation

To confirm a more robust, structurally sound bullish trend, Bitcoin needs to sustainably break through key resistance levels around $72,000 and $78,000. The strength with which these levels are surpassed will indicate the durability of the current move.

Market expectations reflect cautious optimism about the Fed’s next steps. According to CME FedWatch, the probability of a pause in rate cuts at the December meeting has fallen to 28% from 33%, indicating traders still price in further easing in the near future. This dynamic provides a favorable context for Powell’s speech and the Fed’s decisions in the short term, keeping liquidity channels open for risky assets.