Daniel Walker
As widely expected, the Federal Open Market Committee (FOMC) reduced its benchmark federal funds rate by 25 basis points, bringing the range to 4.00%–4.25% in an 11-1 vote.
In its official statement, the U.S. Federal Reserve noted that economic growth slowed in the first half of the year, with job creation easing and unemployment ticking slightly higher. Inflation, however, remains elevated compared to target levels.
This is the Fed’s fourth consecutive quarter-point cut following similar moves in September, November, and December 2024. Policymakers also signaled the likelihood of two additional cuts before the end of the year.
President Donald Trump has been vocal about his dissatisfaction with Fed Chair Jerome Powell, repeatedly urging for more aggressive rate cuts. Earlier this week, Trump posted on Truth Social that the Fed should deliver a reduction “bigger than [Powell] had in mind.”
Implications for Crypto Markets
Historically, lower interest rates reduce the appeal of traditional investments, pushing investors toward alternative assets such as Bitcoin and Ethereum. Analysts say the latest cut could increase market liquidity, potentially boosting crypto trading activity.
Some strategists warn that the next 100 basis points of easing may have the greatest impact on asset prices in this cycle. As Kraken Global Economist Thomas Perfumo explained: “Investors view normalized interest rates closer to 300–350bps. Given the convexity effect, the next 100bps will matter more than the last.”
At the time of writing, Bitcoin traded at $116,000, down 0.6% in 24 hours, while Ethereum edged up to $4,491, according to PRIME’s market data.
Analysts Eye End-of-Year Crypto Rally
September has historically delivered poor returns for risk assets, including cryptocurrencies, but optimism is building for a strong finish to 2025.
Bitwise CIO Matt Hougan compared current conditions to a “Super Bowl pre-game show,” citing factors such as:
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Ongoing Fed rate cuts
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Record inflows into exchange-traded products
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Growing concerns over the U.S. dollar
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Momentum in tokenization and stablecoin adoption
These dynamics, Hougan argued, are setting the stage for a potential end-of-year crypto rally.
Crypto-Friendly Appointment at the Fed
In a notable development, the U.S. Senate confirmed Stephen Miran to the Federal Reserve Board. Known for his crypto-friendly stance, Miran previously worked at Hudson Bay, an investment firm active in FTX bankruptcy claims. He was also the only Fed governor to vote in favor of a 50bps cut, instead of 25bps.
Additionally, the Fed plans to host a conference next month on stablecoin business models and tokenization, signaling increasing interest in blockchain’s role within the financial system.
Stablecoins and the Rate Cut Dynamic
While lower rates are generally positive for risk assets, stablecoins occupy a unique position.
CoinFund President Chris Perkins explained: “Yield is central to stablecoin value. Lower rates don’t hurt issuers—in fact, they often drive demand higher, since users seek yield elsewhere in DeFi.”
He highlighted that 35% of USDT holders use it as a savings tool, while 63% of USDT transactions are transactional, underscoring its dual role in the ecosystem.
Similarly, Will Beeson, co-founder of Uniform Labs and former head of tokenized assets at Standard Chartered, argued that stablecoins will remain essential for payments utility, even if yield-bearing dynamics lose appeal in a low-rate environment.
