Key Takeaways
- The FOMC announced its first rate cut of the year by 25 bps.
- Crypto markets showed little reaction, with Bitcoin and Ethereum posting modest gains.
- Powell signaled the possibility of at least two more cuts later this year.
On Tuesday, the U.S. Federal Reserve delivered its first interest rate cut of 2025, trimming the federal funds rate by 25 basis points.
The widely anticipated move, however, failed to ignite the cryptocurrency market, where traders had been hoping for a deeper reduction.
Markets React Tepidly
The Federal Open Market Committee’s (FOMC) decision to cut rates by 0.25% points brought the target range to its lowest level this year.
Still, the announcement had little impact on digital assets, reflecting expectations that had already been priced in.
Following the announcement, Bitcoin (BTC) briefly bounced from $114,794 to $117,198 but ended the day lower on a 24-hour basis.
Ethereum (ETH) showed a similar pattern, rising from $4,429 to $4,586 before pulling back, leaving it roughly 8% shy of its all-time high near $4,923.
The lack of sustained upside also triggered a wave of liquidations.
Roughly $400 million in long and short positions were wiped out in the 24 hours after the Fed’s statement, with more than 110,000 traders caught in the swing.
Expectations for More Cuts
While Tuesday’s cut did little to move markets, Fed Chair Jerome Powell left the door open to additional easing later in the year.
In his post-meeting remarks, Powell suggested that at least two more cuts could be made if economic conditions warrant them.
Futures markets quickly adjusted, pricing in two to three cuts before the end of 2025.
President Donald Trump, who has repeatedly pressured Powell for more aggressive action, renewed his calls for a larger reduction, even as one of his own appointees to the Fed, Stephen Miran, dissented in favor of a deeper cut.
Trump has argued for sweeping rate reductions since the onset of his tariff war, though the urgency has faded as financial markets recovered and equities set new highs this year.
Crypto Awaits Liquidity Boost
Analysts say the muted response in digital assets reflects a “sell the news” environment, but longer-term sentiment remains optimistic.
With liquidity expected to rise as cuts accumulate, Bitcoin and altcoins could benefit from renewed risk appetite.
“The September cut was fully priced in,” said one trader. “The real catalyst will come if Powell follows through with multiple cuts this year. That’s when crypto could see a true breakout.”
For now, the Fed’s cautious easing has bought markets time, but traders remain fixated on whether deeper reductions arrive before year-end.
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Prashant Jha is a seasoned crypto journalist based in Delhi, India, with a Bachelor’s Degree in Computer Science Engineering. Passionate about the evolving world of blockchain and cryptocurrencies, he has been a dedicated voice in the industry since 2018. Prashant’s expertise lies in regulatory reporting, where he unravels complex legal and financial developments with clarity and precision. Before joining CCN in 2024, he honed his craft at Cointelegraph, establishing himself as a trusted name in crypto journalism.
His coverage spans major industry events, including the high-profile collapses of FTX, Three Arrows Capital (3AC), and LUNA, offering readers insightful analyses of their regulatory and market implications. Prashant’s technical background enables him to bridge the gap between intricate blockchain technology and its real-world applications, making his work accessible to novices and experts.
Beyond his professional pursuits, Prashant is an avid music enthusiast, often exploring diverse genres to unwind. A sports lover, he has a particular passion for cricket and frequently engages in discussions about the game. His multifaceted interests and sharp journalistic instincts make him a valuable contributor to CCN, where he continues shaping the crypto landscape's narrative.
