Federal Reserve rate cut impact on crypto: The Fed’s 25-basis-point cut to 4.00%–4.25% reduces money-market yields and may redirect roughly $7.2T–$7.5T toward equities and alternatives, potentially boosting crypto prices if liquidity shifts and risk appetite rise.
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Fed cut: 25 bps lowers the policy rate to 4.00%–4.25%
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Markets may reallocate cash from money-market funds into risk assets, including crypto.
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FOMC SEP median projects 3.6% (2025), 3.4% (2026), 3.1% (2027); outcomes remain probabilistic.
Federal Reserve rate cut impact on crypto: Fed lowers rates to 4%-4.25%, spurring capital flows toward crypto — read COINOTAG analysis and market implications.
Powell said the Federal Open Market Committee is weighing interest rates on a meeting-by-meeting basis, with no long-term consensus.
US Federal Reserve Chair Jerome Powell said the 19 members of the Federal Open Market Committee (FOMC) remain divided on additional interest rate cuts in 2025. The Fed cut the policy rate by 25 basis points today, bringing the federal funds target range to 4.00%–4.25%.
What is the Federal Reserve rate cut and how will it affect crypto?
The Federal Reserve rate cut is a 25-basis-point reduction in the policy rate to 4.00%–4.25%. Federal Reserve rate cut impact on crypto can include lower money-market yields and increased incentive for capital to flow into equities and crypto, boosting risk-on asset performance if investors reallocate.
Jerome Powell addresses the media in a press conference on Wednesday, following the FOMC’s decision to lower interest rates by 25 BPS. Source: Federal Reserve
How likely are further rate cuts in 2025?
The FOMC remains split: 10 of 19 participants penciled in two or more cuts for the rest of 2025, while nine projected fewer or no additional cuts. Powell emphasized the Summary of Economic Projections (SEP) should be read as a distribution of possible outcomes rather than a certainty.
What did the SEP project for 2025–2027?
Powell noted the SEP median projected policy rates of 3.6% for end-2025, 3.4% for end-2026, and 3.1% for end-2027. He urged readers to interpret these as probabilistic scenarios.
| Year | Projected year-end rate (median) |
|---|---|
| 2025 | 3.6% |
| 2026 | 3.4% |
| 2027 | 3.1% |
Federal Reserve announces a 25 BPS cut. Source: Federal Reserve
Why does a Fed cut matter for crypto liquidity?
Lower policy rates generally push down yields on money-market funds. Matt Mena, crypto research strategist at exchange-traded product provider 21Shares, estimates roughly $7.2 trillion–$7.5 trillion remains in money market funds. Falling yields create an incentive to redeploy capital into equities and alternatives, including crypto.
Crypto traders are watching expectations closely. Polling and prediction markets referenced by market strategists indicate significant probability that Bitcoin could test new highs if liquidity and risk appetite align. These are scenario-based market calls, not guaranteed outcomes.
Frequently Asked Questions
How soon will the rate cut affect crypto markets?
Impact timing varies: some flows can shift quickly as fund yields drop, while asset reallocation and confidence effects may take weeks. Market reaction depends on liquidity, positioning, and incoming macro data.
Does the Fed cut guarantee higher crypto prices?
No. A Fed cut creates a more favorable macro backdrop for risk assets, but crypto prices still depend on investor sentiment, on-chain metrics, regulatory news, and broader market liquidity.
Key Takeaways
- Policy change: Fed cut 25 bps brings rates to 4.00%–4.25%.
- Liquidity effect: Lower money-market yields may redirect trillions into risk assets, supporting crypto.
- Uncertainty remains: FOMC participants disagree on further cuts; SEP projections are probabilistic.
Conclusion
The Federal Reserve rate cut alters the macro liquidity backdrop and could benefit crypto if capital reallocation and risk appetite materialize. Markets should be monitored for signals from the FOMC, economic data, and on-chain indicators. COINOTAG will continue tracking developments and updating analysis as the Fed’s stance evolves.
Published: 2025-09-17 | Updated: 2025-09-17 | Author: COINOTAG
