Bitcoin and other blue chip cryptocurrencies dropped sharply Wednesday after the US Federal Reserve cut interest rates 0.25%, and Chair Jerome Powell signalled interest rate cuts would slow in 2025.

Bitcoin plunged to $100,800 following Powell’s comments. It registered a 5% drop in the past 24 hours after topping $108,000 earlier this week. Ethereum, meanwhile, fell 6% to $3,690, and XRP dropped 9%.

The Federal Reserve began cutting interest rates in September, as inflation cooled and the unemployment rate crept upward.

Investors anticipated Wednesday’s cut. But Powell said it was a “closer call,” suggesting the central bank considered not cutting rates at all.

Though Fed officials at their September meeting projected four interest rate cuts in 2025, projections today show they are expecting only two for next year.

The move to ultimately lower interest rates while hinting at fewer cuts next year signalled a relatively hawkish sentiment moving forward, said John Haar, Managing Director at Swan Bitcoin.

On Tuesday, the CME Group’s FedWatch tool put the odds of another 0.25% cut in January at 81%, and the odds of no cut at less than 2%.

After Powell’s press conference Wednesday, that had flipped, with a 91% chance the Fed held rates steady in January and a mere 9% chance it cut rates by a quarter of a percent.

“This was a reluctant deduction,” said Seema Shah, chief global strategist, Principal Asset Management. “One designed to give markets a bit of comfort as the Fed lays the groundwork for a more hawkish approach to policy in 2025.”

Pedro Solimano is a markets correspondent based in Buenos Aires. Got a tip? Email him at psolimano@dlnews.com.