Analysis of Bitcoin's Unexpected Price Decline Post-December 2025 Fed Rate Cut

On December 10, 2025, the Fed cut its benchmark federal funds rate by 25 basis points to 3.5%–3.75%—its third consecutive cut that year. However, the move was overshadowed by hawkish signals: the Fed’s dot plot projected only one additional 25 bps cut in 2026, and Chair Jerome Powell emphasized a “high bar” for further easing [1]. This guidance led Bitcoin to reverse an initial post-announcement rally to ~$94,500, falling to ~$90,000 by December 11 [2][3][4][8].

Compounding Bitcoin’s decline was Oracle’s mixed earnings report (released December 11), which raised concerns about AI spending sustainability and customer concentration risk (notably with OpenAI) [6][7]. This dented overall risk appetite, spilling over into Bitcoin as investors rotated away from risk assets across sectors [3][8]. Additionally, Standard Chartered lowered its 2025 Bitcoin price target from $200k to $100k, citing the end of corporate treasury buying—a key demand driver [8]. Together, these factors countered the typical positive impact of lower interest rates on non-yielding assets like Bitcoin [5].

1. Policy Guidance Trumps Immediate Action
   : Investors prioritized the Fed’s limited future easing outlook over the 25 bps rate cut, highlighting that market sentiment for risk assets is driven more by long-term policy expectations than short-term moves [1][5].
2. AI Sector Sentiment Spills Over to Crypto
   : Oracle’s earnings concerns about AI spending reduced broader risk appetite, demonstrating cross-asset contagion between the AI sector and cryptocurrency markets [6][7][8].
3. Bitcoin Demand Drivers Are Shifting
   : With corporate treasury buying potentially ending, Bitcoin’s price may become more dependent on ETF flows, increasing vulnerability to volatility in that demand source [8].

• Risks
  : Fed policy uncertainty (further hawkish signals could pressure Bitcoin), AI sector volatility (ongoing concerns about spending may reduce risk appetite), and reduced demand diversification (reliance on ETF flows increases volatility risk) [1][6][7][8].
• Opportunities
  : The Fed’s planned short-term liquidity injection starting December 13 could support risk assets, but its long-term impact on Bitcoin is untested [5].

The December 2025 Fed rate cut had an unexpected negative impact on Bitcoin due to hawkish future policy guidance. This was exacerbated by Oracle’s AI earnings concerns and Standard Chartered’s price target reduction. Decision-makers should monitor Fed policy communication, AI sector performance, and Bitcoin demand driver shifts (corporate vs. ETF flows) to understand future price dynamics. No investment recommendations are provided.

[0] Ginlix InfoFlow Analytical Database
[1] CNBC. (2025, December 10). Fed meeting live updates: Fed chief Powell discusses rate cut, central bank’s plan to buy short-term bonds. https://www.cnbc.com/2025/12/10/fed-meeting-today-live-updates.html
[2] Investing.com. (2025, December 11). Fed Rate Cut Exposes Bitcoin’s Inflation Hedge Problem. https://www.investing.com/analysis/fed-rate-cut-exposes-bitcoins-inflation-hedge-problem-200671628
[3] Yahoo Finance. (2025, December 11). Here’s Why Bitcoin is Falling Despite the Fed’s Rate Cut. https://finance.yahoo.com/news/why-bitcoin-falling-despite-feds-121349759.html
[4] CoinDesk. (2025, December 10). Bitcoin Swings Wildly as Fed’s Powell Straddles Labor Market and Inflation Issues. https://www.coindesk.com/markets/2025/12/10/bitcoin-volatile-near-usd94k-as-fed-s-powell-straddles-labor-market-and-inflation-issues
[5] MarketWatch. (2025, December 11). The Fed cut rates, but bitcoin didn’t budge. What gives? https://www.marketwatch.com/story/the-fed-cut-rates-but-bitcoin-didnt-budge-what-gives-f346ad58
[6] Business Insider. (2025, December 11). Oracle just revived fears that tech giants are spending too much on AI. https://www.businessinsider.com/oracle-earnings-ai-stocks-capex-overspending-orcl-nvda-avgo-2025-12
[7] The New York Times. (2025, December 11). Why Oracle Is Worrying Investors About the A.I. Boom. https://www.nytimes.com/2025/12/11/business/dealbook/ai-spending-oracle-openai.html
[8] Reuters. (2025, December 11). Bitcoin dips below $90,000 as AI worries dent risk appetite. https://www.reuters.com/business/bitcoin-dips-below-90000-ai-worries-dent-risk-appetite-2025-12-11/