Bitcoin Dips Ahead of Fed Meeting as Strategy Acquires 10,624 BTC Amid Market Caution

Key Points Summary:

• Bitcoin retreated modestly as investors eyed the Federal Reserve meeting, expecting a rate cut.

• Strategy (NASDAQ:MSTR) announced it acquired 10,624 BTC, increasing its holdings to 660,624 BTC despite index exclusion risks.

• Most altcoins saw declines as the market adopted a risk-averse stance.

Bitcoin experienced a slight decline on Tuesday, trading at approximately $90,011.6, as investors exhibited caution ahead of the Federal Reserve's policy meeting, where markets widely anticipate a rate cut. At 01:16 ET (06:16 GMT), the leading cryptocurrency was down 1.5%, lingering within the $90,000 to $92,000 range. 

As a sign of consolidation, Bitcoin’s recent performance reflects traders' hesitancy to take new positions ahead of major macroeconomic indicators. Expectations for a quarter-point rate reduction during the Fed's two-day meeting, scheduled for December 9-10, remain elevated, with Fed funds futures indicating an roughly 87% probability for such a move.

The case for an easier monetary policy is bolstered by recent softening economic data from the U.S., notably signs of a cooling labor market and persistent but moderating inflation. However, not all Federal Reserve officials are in agreement regarding the future trajectory of U.S. growth and inflation, introducing the possibility of a surprise decision to hold rates steady.

Lower interest rates typically weaken the U.S. dollar and diminish returns on cash and fixed-income securities, thereby making alternative non-yielding assets such as Bitcoin more appealing. Bitcoin's resurgence, which began in late 2024, can largely be attributed to expectations of an extended easing cycle at the Fed.

In a significant move, Strategy (NASDAQ:MSTR), the largest publicly traded Bitcoin-treasury firm, disclosed on Monday that it has acquired an additional 10,624 Bitcoin, raising its total holdings to approximately 660,624 BTC. This purchase, executed between December 1 and December 7 at an average price of $90,615 per coin, comes amid concerns over potential exclusion from key benchmarks like MSCI indexes. Such index exclusions could trigger large-scale outflows, thereby putting further pressure on the company’s equity valuation.

Within a broader risk-off sentiment, the majority of altcoins faced losses on Tuesday. Ether, the second-largest cryptocurrency, fell 0.8% to $3,104.92, while XRP, the third-largest, slipped by 1.4% to $2.05. Both Solana and Polygon declined by 2%, and Cardano remained relatively stable. Among meme tokens, Dogecoin and $TRUMP each saw nearly a 1% drop.

As the market anticipates the Fed's decision, uncertainty looms over both Bitcoin and altcoin valuations. Investors continue to navigate a delicate balance between seizing opportunities and mitigating risks as economic indicators evolve.