After the Federal Open Market Committee (FOMC) meeting held on December 18, global stock market indices recorded a slight deterioration. However, Bitcoin (BTC) remains stable and at the time of writing it was trading around $90,000.

Bitcoin stable amid speculation of slower interest rate cuts

After more than a year of consecutive interest rate increases, the US Federal Reserve (Fed) began cutting interest rates in September, lowering them by 50 basis points. This sparked optimism in both the cryptocurrency and stock markets, which rose in anticipation of dovish monetary policy favoring risky assets.

However, according to A report According to K33 Research, the December 18 FOMC meeting raised some doubts about regular rate cuts as Fed Chair Jerome Powell suggested a slower pace of monetary policy easing in 2025. The Fed’s decision to ponderous interest rate cuts is largely due to potential inflationary pressures with the Trump presidency.

As a result, the S&P 500 – a stock index tracking the performance of the 500 largest companies listed on the US stock exchange – fell by 2.55% over the past month. Despite this decline in share prices, Bitcoin has shown resilience, reflecting its status as an emerging asset class.

Commenting on the development, Vetle Lunde, research director at K33 Research, said the FOMC meeting scheduled for December 18 is the catalyst for the recent economic downturn. Lund added:

The last two weeks following the FOMC meeting have been characterized by global risk reduction, with bitcoin reporting negative two-week returns of 11% while ether fell 15%, pushing ETH/BTC towards 0.036.

While the 11% decline in Bitcoin’s price is significant, it is relatively modest in the context of Bitcoin’s historical performance. During a bull run, declines of 20% to 30% are common for the leading cryptocurrency, with altcoins often experiencing even steeper declines before rebounding.

Lunde also noted that Bitcoin’s 30-day correlation with the Nasdaq rose above 0.5 for the first time since September. This elevated correlation suggests that Bitcoin is increasingly mirroring the movements of classic, high-tech stock markets.

The market is preparing for inflation under Trump

Even though the Fed has cut interest rates by 100 basis points since September, markets remain cautious about persistent inflation. This concern is clearly observable in the 100 basis point enhance in the yield on 10-year Treasury bonds.

The recent fall in the BTC price is boosting crypto trader Arthur Hayes forecast that the flagship cryptocurrency could witness a “shocking dump” around Trump’s inauguration. Next, chain analysis suggests that BTC could face a piercing correction to $80,000.

Many industry experts have said this maintain that Bitcoin’s long-term bullish outlook remains intact. At press time, BTC is trading at $94,805, up 2.6% in the last 24 hours.

Featured image from Unsplash.com, chart from TradingView.com