7 Reasons Bitcoin Price is Down Today: Impact of Fed Policy on Crypto Market (12/12/25)

Jakarta, Pintu News – The cryptocurrency market is back in the news after Bitcoin (BTC) experienced a significant drop below the $90,000 threshold or around Rp1,500,840,000.

Based on a report from Coindesk, this decline was triggered by the market’s response to the Federal Reserve’s (Fed) latest interest rate policy which was considered less dovish. Although the Fed cut interest rates by 25 basis points to 3.25%, the message conveyed was considered insufficient to provide confidence regarding the direction of monetary easing going forward.

Impact of Interest Rate Cut on Crypto Market

According to data from Coindesk, the Fed’s rate cut was anticipated by the market, but the accompanying statement did not provide the risk boost that crypto market participants were hoping for. Bitcoin (BTC) is trading below $90,000, recording a 2.4% drop since the start of the Asian trading session, while Ethereum (ETH) is down 4% to $3,190. These movements indicate a move away from risky assets triggered by unrest regarding the direction of monetary policy.

The Coindesk report added that the CoinDesk 20 Index also fell by more than 4%, exposing widespread pressure across various cryptocurrency assets. The sell-off is seen as a reaction to the Fed’s more cautious outlook in signaling additional rate cuts. This dampened market hopes for more aggressive easing.

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The Fed’s Internal Divisions and Their Impact on Market Volatility

According to a statement by Fed officials quoted by Coindesk, two members of the Federal Open Market Committee (FOMC) rejected a rate cut, emphasizing that not all members agree on the easing strategy. In addition, six members predicted that further cuts would be inappropriate, reinforcing the view that the future path of monetary policy will be tighter than the market expects.

The Fed’s latest forecast shows only one additional cut until 2026, a far cry from market expectations of two to three cuts. Greg Magadini, director of derivatives at Amberdata, emphasized that uncertainty is increasing as Chairman Jerome Powell will be replaced in May 2026. Magadini mentioned that if replaced by a Trump administration loyalist, the direction of interest rate cuts could change drastically, further adding to the uncertainty in the crypto market.

Liquidity Management Program: Why It’s Not QE

The Fed also announced plans to buy $40 billion worth of short-term debt securities to manage money market liquidity. According to Coindesk, many crypto market participants misinterpreted this move as quantitative easing (QE) as it happened in 2020-2021. In fact, this action is more of a reserve management program aimed at addressing money market tensions, not expanding the balance sheet to support speculative investments.

Reserve management is different from traditional QE that targets the purchase of long-term Treasuries and mortgage-backed securities. QE usually aims to reduce long-term interest rates and massively increase liquidity. In this context, the Fed’s move is not directed at encouraging risky assets such as cryptocurrencies, so the impact on Bitcoin (BTC) price is likely to be negative.

Declining Risk Sentiment and its Impact on Top Crypto Assets

Risk aversion is an important metric that many analysts monitor. According to a Coindesk report, the declining appetite for risky assets is due to policy uncertainty and the potential for inflation to fall short of its target. This has created additional pressure for cryptocurrencies such as Ripple (XRP), Solana (SOL), and other resilient altcoins that have seen declines in recent days.

These market movements show that while crypto is still widely talked about as an asset of the future, institutional investors are choosing caution while waiting for a clearer direction of Fed policy. This situation also affects short-term trading strategies, where volatility increases and prices are easily affected by macro sentiment.

Macro Impacts that Steal the Attention of Market Players

The Fed’s less aggressive move is in the spotlight because it narrows the space for a liquidity boost in crypto assets. According to Coindesk’s analysis, if the Fed maintains its cautious stance, the crypto market may not get the catalyst it needs to stage a major rally in the near future. This pressure increases the risk of a deeper correction even though Bitcoin (BTC) was previously observed as one of the top cryptos with strong performance.

These factors have put the market back in a phase of uncertainty influenced by global sentiment, making Bitcoin (BTC) and other cryptocurrencies vulnerable to short-term volatility.

Short-term Outlook: What to Watch?

Analysts think that the direction of the Bitcoin (BTC) price will be heavily influenced by the Fed’s policy developments in the next few months. Inflation data, labor activity, as well as the dynamics of money market liquidity will be the main indicators that crypto investors are watching. According to Coindesk data, to date, there are no signs that indicate an aggressive policy shift towards monetary easing.

Meanwhile, cryptos such as Bitcoin (BTC), Ethereum (ETH), and Ripple (XRP) remain closely monitored as a barometer of market sentiment. If volatility continues to rise, the crypto market could potentially enter a prolonged consolidation phase.

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*Disclaimer

This content aims to enrich readers’ information. Pintu collects this information from various relevant sources and is not influenced by outside parties. Note that an asset’s past performance does not determine its projected future performance. Crypto trading activities are subject to high risk and volatility, always do your own research and use cold hard cash before investing. All activities of buying andselling Bitcoin and other crypto asset investments are the responsibility of the reader.

FAQ

What are the main causes of Bitcoin’s decline today?

This decline was triggered by the Fed’s decision to cut interest rates by 25 basis points accompanied by a less dovish statement, according to Coindesk.

Why did the crypto market react negatively to Fed policy?

The market views the prospects for monetary easing going forward to be more limited, so risk appetite declined and investors reduced exposure to cryptocurrencies.

Does the Fed’s recent move include quantitative easing (QE)?

It isn’t. According to Coindesk, the Fed’s program is short-term reserve management, not traditional QE that aggressively expands its balance sheet.

How big is the Bitcoin price drop?

Bitcoin (BTC) is trading below $90,000, down 2.4% since the start of the Asian session according to Coindesk data.

What additional factors are worsening the crypto market sentiment?

The Fed’s internal divisions, the unclear path of interest rates until 2026, and the declining attractiveness of risky assets were the dominant factors in weakening the market.

Reference

• Coindesk. Why Is Bitcoin Trading Lower Today. Accessed on December 11, 2025