Bitcoin Falls 10% After Federal Reserve Rate Cut -- Should Investors Be Concerned?

Bitcoin (CRYPTO: BTC) usually rises when the Federal Reserve cuts interest rates. For example, three quick announcements lowered Fed rates from 5.33% to 4.33% in the fall of 2024 and Bitcoin gained approximately 72% in that three-month period.

But the latest rate cut kicked off the opposite cryptocurrency reaction. The Fed lowered long-term rates by 0.25% on October 29 and Bitcoin dropped 4% the next day. And the pain has continued. As of this writing on November 12, Bitcoin is down to $101,667 per coin -- 10% below its price before the rate cut.

Is this price drop just another squiggle on Bitcoin's volatile price chart, or is it the start of a darker downtrend? Let's look at the evidence.

Remember those other scary Bitcoin drops? Me neither.

First of all, nobody really knows what's next for Bitcoin. It's down 10% in two weeks, not 75% overnight. A small change to the Fed's interest rates is neither a deal-breaker nor a game-changing victory for crypto investors. It's just another small economic adjustment among many, easily missed when you look at a long-term chart. The drop is similar in scope to the 8% retreat in the last week of May or the 10% drop just before last Christmas.

You may need to look those events up. I sure did. The holiday price cut was also a counterintuitive reaction to a lower Fed rate, with a side of challenging inflation and unemployment comments. Six months later, a Chinese ban on crypto trading did the trick.

If those events sprang to mind immediately, I envy your long-term memory. In any case, the chart bumps are barely noticeable anymore and Bitcoin rose to an all-time high of $126,198 in early October. The price cuts didn't have staying power.

Bitcoin has some new tricks up its digital sleeve

I can't guarantee that this new fall will be just as forgettable in the long run. The next crypto winter could be right around the corner, or maybe it already started. But things could really be different this time, thanks to several fundamental steps forward.

There are spot-priced Bitcoin exchange-traded funds (ETF) now, and more American crypto regulation than ever, and deep-pocketed institutional investors are taking crypto seriously nowadays.

Moreover, crypto miners have found savvy ways to stay afloat when Bitcoin prices are too low to support profitable mining operations. In 2025, leading names like MARA Holdings (NASDAQ: MARA), Riot Platforms (NASDAQ: RIOT), and Cipher Mining (NASDAQ: CIFR) are selling electricity and data center space to artificial intelligence (AI) experts when it makes sense. The pressure to always keep Bitcoin's price floating higher over time could fade under these circumstances.

Only time will tell whether that's good or bad news for Bitcoin investors, or perhaps just a dampener on the cryptocurrency's price swings. Either way, you're about to find out -- and I honestly can't tell you where Bitcoin is going in the next year or two.

Image source: Getty Images.

Why I'm not panicking, as usual

My time machine is in for repairs as usual -- that's what I get for buying the cheapest model at the flea market. I'm not losing sleep over this 10% Bitcoin tumble, though.

The tailwinds are still in play, too: institutional adoption keeps climbing, the 2024 halving's supply squeeze is still fresh, and someone somewhere is probably explaining blockchain to their grandma right now. That's what it looks like when a radical new idea goes mainstream.

Long story short? Bitcoin's gonna Bitcoin. Expect more potholes on this unmapped road -- maybe even a few sinkholes -- but the destination hasn't changed. This latest drop feels less like a game-changing catastrophe and more like a normal Tuesday night for Satoshi Nakamoto. If you've kept your Bitcoin allocation reasonable (key word there), this dip shouldn't have you reaching for the panic button.

Zoom out far enough on that price chart, and even 10% drops start looking like those anonymous squiggles I mentioned earlier. I don't think this one's a big deal, either.

Anders Bylund has positions in Bitcoin and Mara Holdings. The Motley Fool has positions in and recommends Bitcoin. The Motley Fool has a disclosure policy.