Bitcoin spiked to $94,044 after the Federal Reserve cut rates by 25 basis points on Dec. 11, only to tumble more than 5 percent within hours. Data showed retail traders piled in while whales dumped roughly $100 million worth of tokens, turning what looked like a bullish setup into a textbook liquidity trap.
What Happened: Fed Cut Triggers Whale Exit
The Federal Open Market Committee delivered its third consecutive quarter-point rate reduction to close 2025, a move markets had priced in for weeks. Lower borrowing costs typically favor riskier assets, but on-chain data flagged unusual selling pressure just as the announcement hit.
@DeFiTracer spotted a whale offloading approximately $100 million in Bitcoin within an hour of the decision. XRP briefly touched $2.10 and Solana reached $142, but neither held gains.
Data from Santiment showed the positive-to-negative commentary ratio for Bitcoin peaked before Jerome Powell spoke, suggesting traders had already priced in optimism.
When the rally materialized, the crowd reacted "quite modestly" despite the move toward $94,000, according to the report.
Ethereum saw "a lot of FOMO after a mini surge immediately after Powell spoke," with many traders buying the breakout only to get burned when prices reversed, Santiment said.
The firm described it as a "buy the rumor, sell the news" pattern, with retail chasing the spike while larger holders offloaded into strength.
The Fed also announced it would resume purchasing short-term Treasury bills to keep bank reserves "ample," reversing course after reserves fell "too much." That shift from balance-sheet runoff to renewed liquidity injections marked a dovish turn, though the central bank maintained it remains data-dependent.
Also Read: XRP Falls Below $2.10 as Technical Indicators Signal Further Downside Risk
Why It Matters: Smart Money Bets on Delayed Reaction
Wallets holding 10 to 10,000 Bitcoin have accumulated 42,565 tokens since Nov. 30, Santiment noted, a sign that larger players expect crypto to catch up after lagging traditional assets. Year-to-date, Bitcoin is down 3.6 percent compared to a 17.6 percent gain for the S&P 500 and a 61.1 percent surge in gold.
"A regression to the mean for BTC would be justified," the firm wrote, arguing that crypto historically reacts later than equities or commodities when macro conditions shift.
The combination of three rate cuts and renewed liquidity measures strengthens the case for a delayed rally, according to the analysis.
What remains missing is "a notable dump from retail, which would be indicative of the perfect recipe for a major bull run," Santiment said. The firm expects smaller traders to "run on fumes from this positive news of rates getting cut, for at least a couple of days."
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