Bitcoin falls below $114,500 after FOMC hype fades; market shows 'nervous optimism'

Bitcoin, Ethereum, and most major cryptocurrencies fell late Sunday night as enthusiasm over the interest rate cut waned and traders evaluated upcoming macroeconomic trends.

According to The Block's crypto price page, bitcoin fell 1% over the past 24 hours to trade at $114,467 as of 10:20 p.m. ET on Sunday. Ether dipped 3.3% to $4,307, while XRP fell 2.5% to $2.91 and Solana dropped 3.24% to $232.5.

Bitcoin climbed to around $118,000 earlier this week after the Federal Open Market Committee announced a 25 basis point interest rate cut, fueling risk-on sentiment among investors. However, the recent rate cut did not spark a sustained rally as traders weighed what comes next. 

"The market dipped slightly over the weekend as traders remain cautious in an uncertain macro environment," said Jeff Mei, COO at BTSE. "The Fed indicated that it would take a meeting-by-meeting approach to assess future rate cuts, meaning that rapid easing is unlikely."

At a press conference following the FOMC meeting, Federal Reserve Chair Jerome Powell said that the rate cut decision was a "risk management" move, explaining that he did not feel the need to move quickly on rates, according to Reuters.

Bull cycle over?

Although the September interest rate decision was once seen as a pivotal moment for cryptocurrency prices, analysts said that the market's bull cycle has largely run its course.

"The fireworks from earlier this year have fizzled," said Rachael Lucas, crypto analyst at BTC Markets. "Investors are cautious, long-term holders aren’t panicking, but short-term traders are restless. On-chain data shows holders aren’t selling, so sentiment is more 'nervous optimism' than outright fear."

Still, Lucas added that this isn't a reversal but just a pause. "Long-term holders are still in, but traders are waiting for a breakout above US$124K (for BTC) to call the next leg up."

The crypto market still has a wide array of potential catalysts that could catapult prices up to new highs, Lucas said. Potential catalysts for a market rebound include the approval of spot bitcoin ETFs in new regions, a surge in institutional demand from major corporations, or even adoption by sovereign entities, the analyst added.