Bitcoin (BTC) and most major cryptocurrencies traded flat on Wednesday, showing little immediate reaction to the Federal Reserve’s (Fed) decision to lower interest rates by 25 basis points (bps), a move broadly expected by markets. BTC was last seen around $116,000 after briefly climbing above $117,000 ahead of the announcement.
Fed cuts rates but signals caution
The Federal Open Market Committee (FOMC) cut rates by 25 bps, marking its first move of 2025. Policymakers projected two additional cuts before year-end, citing weakening labor market conditions.
The vote highlighted a split within the Fed. Newly sworn-in Governor Stephen Miran called for a 50 bps reduction, while six members opposed further easing this year. Nine officials favored two more quarter-point cuts in 2025.
In its statement, the Fed noted that economic activity moderated in the first half of the year, with job gains slowing and unemployment edging higher—though still at historically low levels. Inflation, meanwhile, remains elevated.
Crypto market reaction muted
Despite the policy shift, digital assets held steady. Ethereum (ETH), XRP, BNB, and Solana (SOL) each posted modest gains of just over 2%, but overall sentiment remained subdued. The muted response suggests the rate cut was largely priced in, aligning with broader financial markets.
BTC’s consolidation mirrored the S&P 500 (SPX), which slipped slightly after the Fed’s decision. Historically, the SPX has shown mixed near-term performance following rate cuts, ending the first month lower about half the time. However, one year after cuts—particularly when the index trades near record highs—the SPX has averaged gains of 15%.
Given Bitcoin’s rising positive correlation with equities in recent years, similar dynamics could influence crypto market performance if risk appetite strengthens into 2026.
