Bitcoin plunged over 4% on Thursday, falling as low as $106,290, as crypto traders reacted to signals from both the Federal Reserve and President Donald Trump. In short, crypto world seems nervous about the future.
Bitcoin hit a record high of $125,245 on Oct. 5, prompting many crypto optimists to make wild predictions that it could just continue to go up forever. But that line of thinking hasn’t worked out in recent weeks, especially after a flash crash two weeks ago that wiped out billions.
The Federal Reserve announced interest rate cuts Wednesday, setting the benchmark short term rate between 3.75% and 4%, which the Wall Street Journal notes is the lowest in three years. That’s exactly what President Donald Trump had been asking for, as he’s pestered Powell to lower interest rates ever since the president’s second term started back in January.
Traders liked the cuts, but Federal Reserve chair Jerome Powell made some on Wall Street uneasy when he signaled that another rate cut was no guarantee when the Fed met again in December. “Far from it,” Powell said.
President Trump’s meeting with Chinese leader Xi Jinping also weighed on crypto sentiment Thursday. Trump announced that tariffs on goods coming to the U.S. from China would be lowered, but they’re coming down just 10% from 57% to 47%.
Trump has been seen by the crypto community as a positive force, making radical changes that have included scrapping the National Cryptocurrency Enforcement Team (NCET) at the Department of Justice which investigates crypto-related crimes. Typically, any market with honest brokers likes to have a cop on the beat to keep things fair and catch bad actors. But Trump is operating from a different perspective, allowing bad actors to flourish under an operating theory that might be known as “who gives a fuck, get yours.”
Trump has also pardoned high-profile people convicted of crypto-related crimes, including Silk Road founder Ross Ulbricht and most recently Binance founder Changpeng Zhao. While Zhao had already served his prison sentence, the pardon means that he probably won’t need to pay the $50 million he owes in restitution.
Bitcoin’s price has recovered somewhat since its low for the day, bouncing back to $107,900 at the time of this writing. But that’s still down over 5% from where it was a month ago. Compared over a longer period of time, it certainly looks better. A year ago, bitcoin was trading at $68,500, a period just before the 2024 presidential election.
Other cryptocurrencies also plunged Thursday, with Ethereum down 4.3%, BNB down 4%, XRP down 6.7%, and Solana down 6.3%.
