Fed Cuts Rates After 10-Month Pause, Bitcoin Traders Weigh Impact

The Federal Reserve lowered its benchmark federal funds rate range by 25 basis points to 4.00%–4.25% on Wednesday, ending a ten-month pause in policy changes. The move, which markets had widely anticipated, brings borrowing costs to their lowest level since December 2022. Fed Chair Jerome Powell described the decision as a “risk management” step in response to a cooling economy and labor market.

Powell noted that U.S. growth in the first half of the year “moderated” while job creation has slowed, partly due to immigration trends. Still, he stressed there was little appetite within the Federal Open Market Committee (FOMC) for a larger cut, and cautioned against rushing into a faster pace of easing.

Signs of labor market weakness have mounted in recent months. The August jobs report showed just 22,000 new positions added, while unemployment climbed to 4.3%—the highest since 2021. Revisions to prior months also revealed weaker hiring than previously reported.

“While this cut was priced in, the Fed’s dot plot signals another 50 basis points of easing ahead,” said Chris Rhine, Head of Liquid Active Strategies at Galaxy. “Any successor to Powell is likely to lean even more dovish.”

Political pressure has also intensified. President Trump has repeatedly criticized the Fed for delaying action, though Powell reaffirmed the central bank’s independence.

Market Response
Bitcoin briefly spiked about 1% to $115,797 following the announcement but later reversed, trading near $115,092, down around 1.5%. U.S. equities also staged an initial rally before turning lower, while gold mirrored the same pattern.

Matt Mena, Crypto Research Strategist at 21Shares, said the market reaction underscores the importance of the Fed’s forward guidance:

“The dovish tilt in the dots signals flexibility to accelerate cuts if needed. That repricing dynamic is what could set Bitcoin up to test fresh highs before year-end.”

Outlook
The Fed’s projections show a divided committee. A slim majority of policymakers foresee two more cuts this year, while others favor holding steady—leaving investors focused on data in the months ahead.