Why Markets Dumped Despite a Bullish FOMC: The Real Forces Behind the Sell-Off

TLDR: 

• Early positioning before the FOMC left little upside, prompting profit-taking once the expected rate cut was confirmed.
• Powell’s cautious tone on inflation and labor conditions reduced confidence in a faster path toward easier policy.
• Oracle’s weak earnings and rising CAPEX fueled concerns about tech demand, spreading fear across risk markets.
• The sell-off reflected elevated expectations rather than a change in macro direction, keeping long-term liquidity intact.

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Bitcoin market dump activity intensified shortly after the Federal Reserve delivered a rate cut widely viewed as supportive for risk assets. 

The move surprised many traders who expected crypto to extend its pre-meeting strength. Instead, Bitcoin erased the full pre-FOMC advance within twelve hours as markets reassessed the environment.

The decline represented a shift from elevated expectations to renewed caution.

Although the policy action aligned with forecasts, the broader reaction showed that traders had positioned early and left little room for additional upside once the announcement became official.

Early Positioning and Renewed Uncertainty

A detailed post from Bull Theory explained that rate cut odds sat near 95 percent before the meeting. 

Several large traders increased exposure last week, anticipating liquidity support and driving the early pump. When the decision confirmed the cut and introduced $40 billion in T-bill purchases, those early movers began reducing positions, starting the initial wave of selling.

Powell’s press conference introduced another layer of caution. He noted that inflation remained above target and described a softer labor market. 

The Fed’s projections also showed only one cut expected in 2026. This combination reduced confidence among traders who hoped for a stronger signal toward easier conditions.

Once U.S. markets closed, the downturn intensified. Overnight trading saw additional pressure as uncertainty replaced the earlier optimism. 

Bitcoin followed the risk-off tone, pulling back sharply as liquidity trades unwound.

Bull Theory added that softer labor data may still give the Fed flexibility to ease later. However, the immediate reaction centered on the absence of a firm timeline and the need for traders to reassess positioning after the event.

Corporate Earnings and Broader Risk Aversion

The sell-off widened after Oracle released its quarterly results. The company missed adjusted revenue projections and lifted capital expenditure plans, sending the stock down sharply in after-hours trading.

 The decline pushed U.S. futures lower and added pressure to an already unstable market environment.

Traders viewed the earnings miss as a sign of potential cooling demand across the technology sector. This concern spread quickly, creating a shift away from high-beta assets. 

Crypto markets absorbed the fallout as the sentiment change moved from equities into digital assets.

The reaction aligned with an environment where expectations ran ahead of reality. Several traders had already priced in aggressive liquidity conditions, making the market vulnerable to any negative catalyst. As a result, both equities and crypto moved lower in a synchronized manner.

Bull Theory noted that the broader macro backdrop still supports liquidity over the coming year. The Fed has delivered three consecutive cuts, T-bill purchases remain elevated, and Powell signaled no expectation of a rate hike. 

The sell-off reflected expectation mismatch rather than a change in economic direction.

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