The crypto market fell dramatically on Tuesday after Federal Reserve Chairman Jerome Powell stated that another interest rate cut in December is not certain.

After Federal Reserve Chair Jerome Powell stated that another interest rate cut in December is far from certain, the crypto market fell precipitously on Tuesday. Investor confidence that the Fed will keep loosening monetary policy to help slow the GDP was tempered by his remarks.

Powell Suggests No Fed Rate Cut in December

Following the October Federal Open Market Committee (FOMC) meeting, Powell recognized that the US labor market is weakening while inflation remains somewhat elevated. He said that recent data demonstrate that the overall economic picture has not changed considerably, despite previous hints of weakness. Powell warned that increased tariffs are putting pressure on prices, posing a tough balance for the central bank.

The comments come as the Fed reduces rates by 25 basis points, as it did last month. It was done to accelerate the slowdown in economic growth and the continuous rise in borrowing costs. Powell, on the other hand, now suggests that the Fed does not need to lower interest rates anymore.

He also stated that Fed officials have “strongly differing views” on whether another cut should occur in December. “Another drop in the policy rate at the December meeting is not guaranteed. “Far from it,” Powell replied.

The Fed decided to cease its balance-sheet runoff on December 1, citing that reserves have reached levels consistent with sufficient liquidity. Powell stated that this measure was necessary due to recent increases in repo rates and funding costs. His statement implies that the Fed has ended quantitative tightening but will not make any additional rate cuts.

Crypto Market Drop: Bitcoin and Ethereum Prices fall

The crypto market reacted fast to the confusing signals. According to TradingView, the price of Bitcoin plummeted 1.49% to $111,237, while Ethereum lost 1.07% to $3,937. Both assets fell quickly after Powell's remarks, wiping off previous gains.

Traders interpreted Powell's statement as a warning that interest rate reduction would not occur again this year, making risk assets such as cryptocurrencies less appealing.

The decrease matched drops in broader financial markets, as US Treasury yields rose and the dollar strengthened.