Bitcoin drops below $100,000 after Fed Chair Powell’s comment against BTC reserve

Bitcoin dipped under the $100,000 line on Wednesday night following U.S. Federal Reserve Chair Jerome Powell’s comments against forming a national bitcoin reserve.

According to The Block’s bitcoin price page , the world’s largest cryptocurrency fell 6% in the past 24 hours to trade at $98,940. Bitcoin has been trading above the $100,000 level in the past week, during which it set a new all-time high of $108,135.

Most altcoins also plunged on Wednesday, with ether losing 6.5% and XRP dropping 12.64%. The GMCI 30 index, which measures the performance of top 30 cryptocurrencies, fell 7.18% in the last day.

Bitcoin’s most recent rally rode on the back of U.S. President-elect Donald Trump’s recent comment reinforcing his plan to build a national strategic bitcoin reserve. Several other U.S. states, including Texas, Pennsylvania and Florida, have seen bills aimed at building state-backed bitcoin reserves, further fueling positive sentiment among traders.

However, Powell said during a news conference on Wednesday that the central bank is not allowed to hold bitcoin and is "not looking for a law change," in response to a question on his view on the U.S. government bitcoin reserve.

Arthur Hayes, former BitMEX CEO and current CIO of Maelstrom, wrote in a recent article that he expects the crypto market to see a major sell-off around Donald Trump’s inauguration in January, as investors would realize the discrepancy between their hopes and reality.

“The market will instantly wake up to the reality that Trump has at best one year to enact any policy changes on or around January 20th,” Hayes said. “This realization will lead to a vicious sell-off in crypto and other Trump 2.0 equity trades.”

While the Federal Open Market Committee decided to cut interest rates by 25 basis points on Wednesday, Powell forecasted that interest rate cuts would slow down in the coming year and mentioned that Wednesday’s rate cut was a “closer call” than implied by financial markets, Reuters reported .

The U.S. stock market fell sharply on Wednesday. The Dow Jones Industrial Average lost 2.58%, the Nasdaq Composite dropped 3.56% and the SP 500 Index shed 2.95%, according to MarketWatch.