- Fed’s rate cut addresses employment risks amid ongoing inflation.
- BTC and ETH trading volumes increase following monetary changes.
- Institutional investors adjust allocations due to eased conditions.
The U.S. Federal Reserve cut interest rates by 25 basis points in September 2025, aiming to address rising labor market risks amid ongoing inflation concerns.
This marked the first rate cut since December 2024, influencing market dynamics with potential impacts on cryptocurrency volatility and liquidity.
The U.S. Federal Reserve implemented a 25 basis point rate cut in September 2025, addressing rising labor market risks. This action marks the first since December 2024, lowering the federal funds rate to 4.0%–4.25%.
The Federal Open Market Committee (FOMC), led by Jerome Powell, took this step, citing downside risks to employment despite high inflation. Although the decision wasn’t unanimous, a consensus was reached for a 25 basis point cut.
“In support of maximum employment and price stability, the Committee decided to reduce the target range for the federal funds rate to 4.0%–4.25%. Downside risks to employment have risen, while inflation remains elevated.” — Jerome Powell, Chair, Federal Reserve
Institutional investors and asset managers are adjusting their strategies in response to eased monetary policies. The rate cut has prompted moderate increases in Bitcoin (BTC) and Ethereum (ETH) trading volumes.
The move has financial implications, prompting shifts in crypto markets as investors seek risk-on assets. U.S.-centric stablecoins and DeFi protocols are observing volatility and inflow surges following the Fed’s decision.
Telegraphed actions by the Fed impact cryptocurrency liquidity and fund allocations. Macro trends following such rate cuts historically influence market behaviors and valuations over the short term.
Past monetary policy shifts, like in 2019 and March 2020, saw increased speculative inflows into cryptocurrencies, particularly Layer 1 tokens. These historical events provide context for potential market reactions to current modifications.
