The Fed Cuts Rates: What It Means for the Economy and Crypto
On September 17, the U.S. Federal Reserve (Fed) lowered its key interest rate by 0.25%, setting it between 4% and 4.25%. This is the first cut since December 2024.
The Fed said the move was due to signs of a slower job market, even though inflation is still a bit high. The vote passed with 11 members in favor and 1 against.
Trump Reacts
Former President Donald Trump immediately criticized Fed Chair Jerome Powell, saying the cut was “too late” and should have been much bigger. He claimed that lower rates would boost the real estate market.
This highlights the ongoing tension between the Fed’s independence and political pressure.
Market Impact
- Dollar weakened
- Bitcoin dropped slightly to $116,000 (-0.6%)
- Ethereum stayed steady at $4,491 (+0.26%)
Lower rates usually make safe investments like bonds less attractive. As a result, investors often move to riskier assets such as crypto.
What’s Next?
Economists expect two more Fed rate cuts before the end of 2025, which could give crypto markets a big boost.
- Thomas Perfumo (Kraken): The real impact will come from the next 100 basis points in cuts, which could strongly push up asset prices.
- Matt Hougan (Bitwise): Compared today’s situation to a “pregame show before a big rally,” expecting strong year-end gains.
- Chris Perkins (CoinFund): Said lower rates increase demand for stablecoins, as people still want dollar-based returns in DeFi.
Key Numbers
- $116,000 – Bitcoin price at the announcement
- $4,491 – Ethereum price
- 35% – USDT holders using it for savings
- 63% – Crypto transactions using USDT
- 2 more cuts – Planned by the Fed in 2025
Bigger Picture
The Fed will hold a conference next month on stablecoins and tokenization, showing how crypto is becoming part of mainstream U.S. monetary policy.
For Trump, lower rates always mean growth. For the Fed, it’s a balancing act—cut too fast and inflation may return, cut too slow and recovery stalls.
Still, one thing is clear: the gap between traditional finance and crypto is getting smaller.
