Fed Slashes Rates to 3.50%-3.75%: What This Means for Crypto in an Uncertain Market

The Federal Reserve just made its move—cutting the benchmark rate to a 3.50%-3.75% range. Markets were waiting, crypto was watching. Here's why it matters.

The Rate Cut Playbook

When the Fed trims rates, it's not just about cheaper loans. It's a signal. Liquidity gets a potential boost, and risk assets—yes, including Bitcoin and altcoins—often catch a bid. Traders are already pricing in what happens next.

Uncertainty Is the New Certainty

The 'amid uncertainty' tagline says it all. Economic data's mixed, inflation's playing hard to get, and the Fed's walking a tightrope. For crypto, this ambiguity is a double-edged sword: volatility fuels opportunity, but it keeps traditional money on the sidelines. Another classic case of central bankers trying to steer a ship they can't see.

Digital Assets in a Lower-Rate World

History doesn't repeat, but it rhymes. Lower yields on traditional safe havens make the potential upside of digital assets more attractive. Capital starts hunting for returns, and decentralized finance doesn't need an invitation. This could be the narrative shift that breaks crypto out of its correlation shackles.

The Fed's cut is a reaction, not a strategy. While Wall Street frets over basis points, the crypto ecosystem builds through the noise. The real bet isn't on the rate itself—it's on what happens when old-world monetary policy meets a new-world asset class that operates 24/7.

TLDR

• The U.S. Federal Reserve cuts its fed funds rate range to 3.50%-3.75%.
• Internal dissent grows as Fed members clash over monetary policy direction.
• Two Fed members vote to hold rates steady, while one pushes for a larger cut.
• Fed’s economic projections show slight adjustments to inflation and growth outlook.

The U.S. Federal Reserve has reduced its benchmark federal funds rate by 25 basis points, bringing the range to 3.50%-3.75%. This marks the third consecutive quarterly rate cut, and the new rate level is the lowest seen since 2022. The MOVE was widely expected by market analysts and reflects the Fed’s ongoing response to economic uncertainty.

This decision is significant as it comes amidst considerable internal disagreements among Fed members regarding the appropriate course for monetary policy. Despite these disagreements, the central bank proceeded with the cut, signaling a cautious stance on the future economic outlook.

Disagreement Among Fed Members

Despite the general expectation of a rate cut, not all members of the Federal Reserve supported the move. Two members dissented, calling for the central bank to hold interest rates steady. These members, Kansas City Fed’s Jeffrey Schmid and Chicago Fed’s Austan Goolsbee, voiced concerns about further easing, indicating a more cautious approach toward monetary policy.

On the other hand, Fed Governor Stephen Miran, a recent TRUMP appointee, pushed for a larger 50 basis point reduction. This divergence in opinions highlights the ongoing debate within the central bank over how to best manage the U.S. economy amid ongoing inflation concerns and global economic uncertainties.

Economic Outlook and Inflation Projections

The Federal Reserve’s policy statement highlighted the uncertainty in the economic outlook, emphasizing that risks to both employment and inflation remain elevated. The Fed acknowledged that recent months have seen rising downside risks to employment, prompting the need for a more accommodative stance.

As part of the rate decision, the Fed updated its economic projections. Core inflation for 2025 is now expected to be 3%, a slight decrease from the previous estimate. For 2026, core inflation is projected at 2.5%, down by 10 basis points. The central bank also adjusted its GDP growth forecast, raising the expected growth rate for 2025 to 1.7% and for 2026 to 2.3%.

Political Pressures and the Fed’s Future Path

Amid this decision, President Donald Trump continues to apply political pressure on the Federal Reserve and its Chairman, Jerome Powell. Trump’s criticism of Powell and the Fed’s policies has added a LAYER of complexity to the central bank’s decision-making process. With Powell’s term set to end next year, speculation about his replacement persists.

Attention now shifts to Jerome Powell’s upcoming press conference, where the Fed chair is expected to clarify the central bank’s future approach to interest rates and monetary policy. Market analysts and traders will closely follow Powell’s comments for further insight into whether additional rate cuts are likely in the coming months.

Stock Market and Treasury Yields React

Following the Fed’s announcement, the U.S. stock market showed modest gains, while the price of Bitcoin remained volatile, fluctuating around $92,400. The yield on the 10-year Treasury note dropped by two basis points to 4.15%, reflecting investor uncertainty over the Fed’s decision.

Despite the uncertainty surrounding economic data due to the ongoing U.S. government shutdown, traders are pricing in a 24% chance of another rate cut in January 2026, according to CME FedWatch. The market is keenly awaiting further statements from the Fed to gauge the central bank’s future monetary policy trajectory.