FOMC Cuts Interest Rates By 25 BPS As Markets Eye Risk-On Rally

The US Federal Reserve delivered its first interest rate cut of 2025, lowering the federal funds rate by 25 basis points to a range of 4%–4.25%. The move comes as the central bank attempts to balance slowing economic growth with persistent inflation, while investors weigh how many additional cuts may follow this year.

Speaking at Wednesday’s press conference, Fed Chair Jerome Powell acknowledged divisions within the Federal Open Market Committee (FOMC).

“You will have seen that we have 10 participants out of 19 who wrote down two or more cuts for the remainder of the year, and nine who wrote down fewer than that. In fact, in a good number of cases, no more cuts,” Powell said.

The Fed’s Summary of Economic Projections (SEP) shows median rate expectations at 3.6% by the end of 2025, 3.4% in 2026, and 3.1% in 2027. Powell reiterated that policymakers are taking a meeting-by-meeting approach, emphasizing probabilities over certainties in the economic outlook.

Crypto markets watching closely

Rate cuts are often seen as bullish for risk-on assets like equities and crypto, which benefit from easier access to liquidity and credit expansion. With money market fund yields now set to decline, capital may flow back into equities and alternatives, including digital assets.

Hank Huang, CEO of Kronos Research, believes the Fed’s decision could have a meaningful impact on crypto markets:

“Fed rate cuts will increase liquidity in the crypto market and boost confidence within risk-on assets. This shift sets the stage for a more optimistic outlook and will accelerate capital rotation into digital assets as investors search for higher returns,” Huang told Cointelegraph.

Crypto research strategists echo this sentiment, suggesting that Bitcoin and altcoins may see renewed momentum into Q4 as investors rotate out of cash-heavy positions. Prediction platforms like Polymarket already show over 60% of traders expecting Bitcoin to reach $130,000 before the end of 2025.

With the Fed’s rate path still uncertain, markets remain on edge. But for crypto investors, compressing yields in traditional markets may prove to be the strongest catalyst yet for a renewed bull run.