The U.S. Federal Reserve cut interest rates by 25 basis points on Wednesday, bringing the federal funds target range down to 3.75%–4.00%. This marks the second consecutive rate cut this year, as policymakers respond to slowing growth and limited visibility into key economic data due to the ongoing government shutdown.
Despite the move, the crypto market turned lower. Bitcoin is down nearly 3% on the day, trading below $111,000. Ethereum has fallen over 4% and is back under $3,900. Other major cryptocurrencies are also in the red, with the total crypto market capitalization down 2.5%, now at $3.78 trillion.
Market Response Remains Muted
The rate cut was widely anticipated and already priced in by many investors. Federal Reserve Chair Jerome Powell indicated that no decision has been made regarding additional easing at the December meeting. He described the outlook as uncertain, citing missing government data as a challenge in policy assessment.
Traditional equity markets were mixed in response. The S&P 500 slipped 0.5%, while the Nasdaq fell 0.2%. The Dow dropped 0.4%, even as companies like Nvidia posted gains on renewed optimism around U.S.-China tech talks.
Crypto, in contrast, showed limited upside following the Fed’s announcement. Analysts attributed the subdued reaction to a lack of strong forward guidance and ongoing macroeconomic concerns, including inflation risks and reduced trading volumes.
Read also: How Interest Rates Impact Bitcoin: Exploring the Correlation
Liquidity Conditions in Focus
In addition to the rate cut, the Fed confirmed that it will end its balance sheet reduction program on December 1. The decision to slow quantitative tightening is generally seen as supportive of risk assets. However, crypto prices have yet to reflect any significant shift in sentiment.
Lower rates can reduce the appeal of traditional savings and bonds, which sometimes benefits alternative assets like Bitcoin. But the current market reaction suggests that traders remain cautious, particularly with no clear signal on future rate cuts.
Read also: How to Invest in Gold: From Coins and Bars to Crypto Tokens
Mixed Signals Heading Into November
With no strong commitment from the Fed on future easing, and limited economic data available due to the shutdown, markets appear to be taking a wait-and-see approach. Short-term sentiment in crypto remains sensitive to macro headlines and liquidity signals.
Bitcoin’s price currently hovers between $110,000 and $113,000, while Ethereum continues to trade below the $4,000 level. Any sustained recovery may depend on upcoming labor and inflation data, if released, and further commentary from the central bank.
