US Fed Makes First Rate Cut of 2025 – Crypto Reacts with a Shrug

The US Federal Reserve delivered an expected 25 basis point rate cut, the first reduction this year, but cryptocurrency markets showed minimal reaction to the announcement.
Bitcoin remained essentially unchanged at US$116,929 over 24 hours, while Ethereum, XRP and Solana posted modest gains.
Fed Chair Jerome Powell indicated uncertainty about future cuts with the committee split, as 10 of 19 participants favour two or more additional cuts while nine prefer fewer reductions.
Industry experts suggest the muted crypto response indicates the rate cut was already priced in, though they anticipate potential volatility and a strong year-end rally driven by increased liquidity.

The US Federal Reserve has, as expected, cut interest rates by 25 basis points. It was the first such cut this year, and most analysts had anticipated it. The crypto market, however, barely reacted.

Bitcoin (BTC) is currently trading at US$116,929 (AU$176,284), having risen slightly on the news before falling back by the same amount, leaving it flat over the past 24 hours. Other major tokens, including Ethereum (ETH), XRP and Solana (SOL), are up 1.9%, 1.6% and 3.4% respectively.

The top ten cryptocurrencies over the past 24 hours, source: CoinMarketCap

That’s virtually the same price for BTC as yesterday, when we wrote about the potential rate cut. 10x Research had argued that the OG’s reaction to rate cuts is rarely linear, since crypto tends to move in bursts driven by factors such as inflows, positioning, seasonality and credit spreads – meaning the effects of the cuts may still unfold in the days and weeks ahead.

While crypto usually benefits from rate cuts, the lack of market reaction suggests it was already priced in.

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Samantha Bohbot, Partner and Chief Growth Officer at RockawayX, told CryptoNewsAustralia in commentary emailed prior to the Fed decision that “the most important thing will be the forward guidance around future rate cuts this year”.

She added that Wednesday’s meeting was “less about a surprising Fed decision, and more about Fed Chair Jerome Powell’s comments”.

Many analysts also expect further cuts in 2025, though Powell seems reluctant, noting that the Federal Open Market Committee (FOMC) remains divided on the issue.

During a press conference immediately following the announcement, Powell stressed the Fed’s dual mandate of price stability and maximum employment at a time when inflation remains high and job markets are weakening.

You will have seen that we have 10 participants out of 19 who wrote down two or more cuts for the remainder of the year, and nine who wrote down fewer than that. In fact, in a good number of cases, no more cuts.

Jerome Powell, US Federal Reserve

Bohbot argues that most market observers do indeed expect more cuts, saying that “the market is pricing two cuts on top of the September one (73% probability of 350–375 bps and lower by year-end)”, adding that “any hawkish comments might lead to repricing and a sell-off.”

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She advised investors to embrace ensuing volatility and keep some dry powder ready, just in case:

Lower interest rates increase the liquidity in circulation, and investors deploy capital into riskier assets such as stocks and crypto. This should lead to increased prices of the major blue-chip crypto assets such as BTC, ETH and SOL, with BTC the asset most influenced by liquidity outlooks.

Samantha Bohbot, RockawayX

While September is traditionally a sluggish month for crypto, Bitwise CIO Matt Hougan reckons things will start to heat up later in the year. In a note, Hougan said that “watching the crypto market right now is like watching the Super Bowl pre-game show”, hinting at a huge year-end rally.

Things are set up for a spectacular end-of-year rally, with rate cuts, surging exchange-traded product inflows, rising concerns about the dollar, and incredible momentum in tokenisation and stablecoins.