On Thursday, Bitcoin (BTC) once again fell below the critical $90,000 mark, even after what many expected to be a bullish event following the US Federal Reserve’s (Fed) decision to reduce rates by a quarter point. Bull Theory analysts point to several factors contributing to this unexpected downturn.
Bitcoin Selloff Amid Market Turmoil
The analysts pointed out that the rate cut itself had been largely expected by investors weeks earlier, with a 95% probability already priced into the market.
Prior to the announcement, they noted that many were positioning themselves in expectation of some form of liquidity support from the Fed, which would lead to a rally in Bitcoin prices.
However, when the actual cut and the accompanying plan for $40 billion in monthly T-bill purchases were confirmed, many of these “whales” – major investors in the market – began taking profits.
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Market unease was compounded by Fed Chairman Jerome Powell’s press conference after the announcement, where he highlighted persistent weaknesses in the economy. labor market and continued concerns about inflation. Furthermore, the Fed’s dot plot projections indicated the likelihood of only one additional rate cut in 2026.
The situation was exacerbated by disappointing earnings results from Oracle, which reported second-quarter financials after the market closed. The tech giant missed its adjusted revenue estimates, and higher capital expenditure forecasts sent its stock plunging more than 11% in after-hours trading.
This decline also negatively impacted US stock futures as concerns mounted artificial intelligence (AI) boom may be reaching its peak. Widespread fear about Oracle’s results quickly spread from stocks to the cryptocurrency space.
Ultimately, all three factors converged to lead to a significant sell-off: the rate cut had already been priced into the market, liquidity operations had been preemptively introduced, and Powell’s comments did not provide the strong dovish signal some traders had hoped for.
Positive liquidity conditions expected in 2026
Interestingly, Bull Theory analysts argue that the crypto market’s recent downturn is not indicative of a fundamental shift in direction bearish conditions but rather an overreaction based on high expectations leading up to the Fed’s announcement.
The Fed has now cut interest rates three times in as many meetings, and their plans to buy $40 billion of government bonds next month are aimed at injecting liquidity into the markets.
Moreover, Powell indicated that further rate hikes are not in the offing as a base case, and that the forecasts are solid economic growth remain intact next year.
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While job growth may have been overstated, indicating a weaker labor market, this could give the Fed more flexibility to ease monetary conditions in the future if necessary.
Current market movements illustrate that asset dumping was largely driven by overly optimistic expectations rather than a deterioration in underlying fundamentals.
Looking ahead, the analysts believe that next year is expected to be more favorable for Bitcoin and broader crypto prices in terms of liquidity, which is in stark contrast to the expected conditions for 2025.
Bitcoin recovered above $91,100 at the time of writing amid rising volatility. This puts the top cryptocurrency 26% behind the all-time high of $126,000 achieved in October this year.
Featured image of DALL-E, chart from TradingView.com