Bitcoin Drops Over 5% Amid Fed Rate Decision, Trump Tariff Deadline

Bitcoin and the broader cryptocurrency market experienced a significant downturn, shedding $216 billion in a single day with Bitcoin dipping below $118,200 ahead of the Federal Reserve's interest rate decision and President Donald Trump's looming trade deal deadline. Despite Bitcoin's recent peak above $122,000 in July, the market is currently in a consolidation phase between $115,000 and $120,000, with analysts noting potential for either a breakout above resistance or a pullback toward support levels near $114,000. Key factors influencing Bitcoin's momentum include ongoing ETF inflows, corporate treasury allocations, and regulatory developments such as the GENIUS Act signed by President Trump, alongside macroeconomic signals from the Federal Reserve's upcoming meeting. On-chain metrics show a slowdown in Bitcoin's economic activity, with declines in transfer volume and daily active addresses, suggesting a cooling of speculative interest amid broader market uncertainty. Altcoins such as Ethereum, BNB, Cardano, Tron, and Dogecoin also faced declines, with Ethereum falling below $3,770 and others dropping by up to 3.5%, reflecting a cautious market sentiment. The market anticipates Fed Chair Jerome Powell's speech for guidance on monetary policy, while investors watch the impact of Trump's reciprocal tariffs due to take effect, all contributing to a cautious trading environment.