Federal Reserve Delivers 25bps Cut, Bitcoin Faces Mixed Market Reaction
The Federal Reserve reduced its benchmark interest rate range by 25 basis points to 4.00%–4.25% on Wednesday, its first move since December 2022. The widely expected decision, described by Chair Jerome Powell as a “risk management cut,” follows months of caution as the central bank weighed signs of slowing growth.
Powell acknowledged that economic expansion in the first half of the year had cooled, while the labor market showed further signs of strain. He linked much of the shift to changes in immigration trends but noted there was little support for a deeper cut. “The Fed was right to wait, and we won’t be rushed into larger moves,” Powell said at the post-meeting press conference.
Data has underlined the slowdown. The August jobs report revealed just 22,000 new hires, while unemployment ticked up to 4.3%, the highest level since 2021. Revisions also showed weaker job creation in earlier months.
“Markets had largely priced in this cut, but the new dot plot points to another 50 basis points of easing ahead,” said Chris Rhine, Head of Liquid Active Strategies at Galaxy. “Any Powell successor will likely tilt toward faster and deeper cuts.”
The Fed’s move came amid growing political pressure, with President Trump openly criticizing the central bank’s pace of response. Powell countered that the Fed remains “strongly committed” to its independence.
Bitcoin and Risk Assets React
Bitcoin briefly jumped to $115,797 following the announcement but quickly lost momentum, slipping back to around $115,092, down 1.5% on the day. U.S. equities and gold followed a similar trajectory, with initial gains giving way to declines.
“The dovish lean in the dot plot is more important than the 25bp cut itself,” said Matt Mena, Crypto Research Strategist at 21Shares. “That repricing risk creates an asymmetric opportunity for Bitcoin. The path of easing is what could drive new highs by year-end.”
Outlook Ahead
The Fed’s projections highlighted divisions within the FOMC: a slim majority expect two more cuts before year-end, while others prefer a more cautious path. With labor markets softening and political scrutiny intensifying, markets are preparing for the possibility of faster easing in the months ahead.
