Profit-Taking Accelerates in Markets Following Fed Decision

One of the most significant economic events in December, the decisions announced after the Federal Open Market Committee (FOMC) meeting of the U.S. Federal Reserve (Fed) led to fluctuations in the markets. Despite the Fed's decision to lower interest rates by 25 basis points in line with market expectations, the reduction in the number of anticipated rate cuts for 2025 and the upward revision of inflation forecasts disappointed investors. The Fed raised its inflation forecast for 2025 from 2.1% to 2.5% while limiting the number of expected rate cuts to two.

These developments in the markets triggered a rapid realization of profits due to the Fed making more hawkish statements, contrary to investors' expectations for further rate cuts. The Dow Jones index dropped by 2.58%, the S&P 500 by 2.95%, and the Nasdaq by 3.56% by the end of the day. The consumer sector faced the most significant loss, falling by 4.75%, while real estate dropped by 3.97% and the communications sector by 3.16%. In contrast, the healthcare sector managed to stand out positively, gaining 0.37% within the Dow Jones.

DXY records its sharpest rise in the last two years Following the Fed's decisions, the dollar index recorded its sharpest rise in the last two years, surpassing the 108 level. The index climbed to as high as 108.26 and continued to trade at 108.12, reflecting a 1.10% increase. This move allowed the dollar to gain value rapidly against major currencies, with the EUR/USD pair experiencing a sharp decline of 1.32%, dropping to 1.035.

Powell comments on Trump policies and Bitcoin Fed Chairman Jerome Powell stated that it is still too early to assess the effects of the economic policies proposed by the elected U.S. President Donald Trump. During a press conference following the FOMC meeting, Powell noted that it is impossible to draw definitive conclusions about Trump’s impact on the economy, as the specifics regarding which countries, for how long, and the size of tariffs remain unknown.

Additionally, Powell's remarks about the Fed's inability to hold cryptocurrencies like Bitcoin drew attention. Addressing questions about the idea of the government creating a strategic Bitcoin reserve, Powell said, "We are not allowed to hold Bitcoin," and emphasized that the Fed is not seeking any legislative changes in this regard. He indicated that any steps regarding cryptocurrencies must be evaluated by Congress.

Following Powell's statements, a sharp downward momentum also occurred in Bitcoin. The largest cryptocurrency fell by nearly 7% in the previous trading sessions, dropping below $100,000. However, purchases that emerged from the lows earlier in the day helped BTC recover back to the $101,000 range.