Bitcoin and Crypto Markets Rebound as Fed Signals End of Tightening Cycle

Crypto markets experienced sharp declines on Tuesday, but signs of relief from the U.S. Federal Reserve and investor optimism helped digital assets recover from their worst levels. Bitcoin (BTC) dropped to $109,800 after reaching nearly $116,000 overnight but rebounded to around $112,600, marking a 2.8% loss in the past 24 hours. Ethereum (ETH) slipped 4% to $4,146, while BNB, XRP, and Dogecoin also fell between 4% and 6%. The CoinDesk 20 Index was down 3.2%, reflecting widespread selling pressure.

Federal Reserve Chair Jerome Powell provided a glimmer of hope, signaling that the central bank is nearing the end of its quantitative tightening (QT) cycle—the process of reducing its bond holdings. Powell highlighted cooling labor market conditions and emerging risks to employment, hinting that another interest rate cut could come later this month. His comments helped stabilize both crypto and stock markets, with the Nasdaq and S&P 500 briefly turning positive before closing slightly lower.

However, a late-day Truth Social post from President Trump briefly dampened sentiment after he suggested blocking cooking oil imports from China unless the country boosts soybean purchases, causing another short-term dip in asset prices.

Meanwhile, crypto mining stocks surged as investors bet that the growing demand for computing power driven by artificial intelligence (AI) would benefit these companies. Shares of Bitfarms (BITF), Cleanspark (CLSK), Iren (IREN), Marathon Digital (MARA), and TeraWulf (WULF) all jumped more than 10%.

Analysts remain cautiously optimistic. Vetle Lunde of K33 Research noted that after the recent leverage flush, Bitcoin appears to be entering a constructive accumulation phase. With leverage cleared, improving liquidity, and strong institutional demand—combined with expectations of a looser monetary policy—analysts see current levels as attractive for long-term investors seeking to increase their BTC exposure.