Bitcoin Dips Below $90K Despite Fed Rate Cut: Why?

On Thursday, Bitcoin (BTC) retreated below the $90,000 mark, an unexpected move that occurred even after the US Federal Reserve delivered a quarter-point interest rate cut. According to analysis from Bull Theory, this downturn was the result of three converging factors that created a significant sell-off. First, the rate cut itself was largely anticipated, with market pricing indicating a 95% probability weeks in advance. This led many investors, particularly large ‘whales,’ to position themselves for a liquidity-driven rally ahead of the announcement.

Second, when the Fed confirmed the cut alongside a plan for $40 billion in monthly Treasury bill purchases, these same whales began taking profits, triggering a classic ‘sell-the-news’ reaction. The third factor was the cautious tone struck by Fed Chair Jerome Powell during his post-announcement press conference. Powell highlighted persistent weaknesses in the United States labor market and ongoing inflation concerns, while the Fed’s dot plot projections signaled the likelihood of only one additional rate cut in 2026. This collective messaging failed to deliver the strong easing signal some traders had hoped for, adding to market unease.

Compounding the pressure from the Federal Reserve’s communications was a sharp downturn in traditional finance (TradFi) markets, specifically stemming from tech giant Oracle (ORCL). After the market close, Oracle reported second-quarter financials that missed adjusted revenue estimates. Furthermore, the company’s higher capital expenditure projections sparked concerns that the artificial intelligence (AI) investment boom may be peaking.

The reaction was severe: Oracle’s stock plunged more than 11% in after-hours trading, dragging down US stock futures. This fear quickly spread from the equity markets into the cryptocurrency space. The event demonstrated the continued sensitivity of crypto assets like Bitcoin to shocks in broader risk markets, especially when those shocks involve high-profile technology companies central to current investment narratives.

Despite the sharp sell-off, Bull Theory analysts assert that the decline is not indicative of a fundamental shift toward bearish conditions. They characterize the move as an overreaction driven by overly optimistic expectations leading up to the Fed’s announcement rather than a deterioration in underlying fundamentals. From a policy perspective, the analysts note that the Fed has now enacted rate cuts three meetings in a row.

More importantly, the central bank’s plan to purchase $40 billion in T-bills over the next month is designed to inject direct liquidity into the financial system. Chair Powell also indicated that further rate hikes are not currently on the horizon, and forecasts for solid economic growth next year remain intact. The analysts suggest that if job gains have been overstated—pointing to a softer labor market—it could afford the Fed greater flexibility to ease monetary conditions in the future if necessary.

Looking ahead, the analysts believe the liquidity environment is set to improve. They contrast the current volatility with expectations for 2026, which they project will be more favorable for Bitcoin and broader crypto prices in terms of liquidity support. As of this writing, Bitcoin had recovered to trade above $91,100, though it remains approximately 26% behind its all-time high of $126,000 set in October, underscoring the heightened volatility that defines the current market landscape.