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After a sharp decline, Bitcoin suddenly rebounded around $3,000, driven by renewed optimism about the possibility of a federal rate cut.
The market saw wild swings, with the currency rising rapidly after falling below a seven-month low of $81,000.
The rise came against the backdrop of a statement from New York Fed President John Williams, who said lower interest rates were possible in the near term.
While he acknowledged that the slowdown in inflation had temporarily stalled, he emphasized that there were opportunities for a new round of interest rate cuts while continuing to work towards the 2% inflation target.
Williams explained that monetary policy remains modestly constrained, leaving room for close adjustments to the federal interest rate range in an effort to get closer to neutral and achieve a balance between economic objectives.
His comments followed reports that the Fed would not cut interest rates at its December meeting due to delays in the release of data for October and November.
This is also reflected in the expectations on the “PolyMarket” platform; after the probability of not cutting interest rates exceeded 60% in recent days, the expectation of a 25 basis point interest rate cut after Williams’ speech jumped to 62%.
As for the price of Bitcoin, it reacted directly to these developments, rising from its lowest level of $80,600 to around $84,000 in a matter of minutes, despite facing some resistance.
However, the currency has remained on a clear downward trajectory in recent weeks, falling from over $107,000 on November 11 to just below $81,000 recently.
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