Powell's hawkish remarks severely impacted Bitcoin: it briefly fell below $108,000 before struggling to recover to $110,000

According to the Zhitong Finance APP, on Thursday local time, Bitcoin continued its downward trend after Federal Reserve Chairman Jerome Powell made hawkish remarks, dropping as much as 3.1% and falling below the $108,000 mark. Subsequently, during the European session, demand from buyers pushed the price back above $110,000. As of the time of writing, Bitcoin was trading around $111,315, showing a mild recovery after three consecutive bearish closes earlier this week.

The previous day, the Federal Reserve announced a 0.25 percentage point cut in the benchmark interest rate to 3.75%-4%, marking the second consecutive rate cut, but Powell warned investors "not to assume that future cuts will continue." Interest rate swap data showed that the probability of a 25 basis point cut in December had fallen from nearly 100% to about 60%.

The decline in Bitcoin accelerated briefly after the meeting between the U.S. and Chinese presidents, but the sell-off quickly slowed. Trump stated that both sides reached a trade agreement, and the U.S. would immediately halve the tariffs related to fentanyl on Chinese goods.

Charlie Sherry, CFO of BTC Markets, stated that Powell's remarks "triggered risk-averse sentiment," and that "the meeting between the U.S. and Chinese presidents also stirred the market." Despite some tech stocks rising, cryptocurrencies did not follow suit, indicating relative weakness in digital assets.

After Powell's speech, U.S. Treasury yields and the dollar strengthened, while stock index futures declined. Augustine Fan, a partner at SignalPlus, pointed out that there is "significant division" within the Federal Reserve, and coupled with the government shutdown and data interruptions, this may make the central bank more cautious, waiting for the December meeting to make decisions.

Following the announcement, Bitcoin slid to $109,000, then slightly rebounded, closing near $110,000. The muted reaction confirmed that the rate cut had already been priced into market expectations.

Despite the rate cut, bearish momentum still exists in the entire cryptocurrency market this week. Bitcoin's decline so far this week is currently at 4%, reflecting traders' uncertainty about whether liquidity conditions will improve enough to reignite risk appetite. However, the fundamental positioning indicates that optimistic sentiment is slowly recovering. Data shows that the long-short ratio for Bitcoin has climbed above 2.0, with the total open interest rising from $34 billion to $35 billion, indicating that traders are increasing leveraged exposure in anticipation of a potential rebound.

Technically, the 4-hour and daily RSI readings remain in the bearish zone and have not yet reached oversold levels, suggesting that the correction may not be fully over. For a sustained recovery, Bitcoin must break through the resistance cluster formed by the 20, 50, and 100 EMA on the 4-hour chart, all converging around $112,000. A breakout above this level could change short-term sentiment and re-establish bullish control.

Conversely, if momentum weakens again, the next downside target will be last week's low of $106,600. From an upside perspective, if a successful rebound clears the resistance, Bitcoin's price could return to $116,000, and if follow-up buying strengthens, the price could rise to $118,000 The next few trading days will determine whether Bitcoin will transition from a short-term adjustment to a new bullish phase following the Federal Reserve's latest policy shift