Bitcoin and other cryptocurrencies rose slightly on Wednesday after the Federal Reserve delivered its final interest rate cut of the year.
As expected, the US central bank cut the federal funds rate by 0.25% at its Federal Open Market Committee meeting on Wednesday. But committee members were divided, with two voting to keep rates unchanged and another advocating for looser monetary policy.
Fed Chair Jerome Powell hinted future interest rate decisions may be particularly challenging given conflicting economic data. He would not reveal whether the bank would cut rates in the near future.
“Inflation remains elevated,” Powell told reporters following the meeting.
“Everyone around the table at the FOMC agrees that inflation is too high and we want it to come down, and agrees that the labor market has softened and that there is further risk.”
Analysts told DL News this week that markets had already priced in Wednesday’s interest rate cut.
Following Powell’s comments, the leading cryptocurrency rose slightly by over 1%. But it has since retraced those small gains, and was recently priced at $93,703 — virtually unmoved over a 24-hour period.
Ethereum also rose slightly on Powell’s comments and was recently trading around $3,357 per coin, up by nearly 2%. XRP also seesawed; the fifth biggest digital asset was priced at slightly over $2 Wednesday afternoon New York time.
Greg Magadini, director of derivatives at Amberdata, told DL News that the Fed was “very divided.”
He added that all eyes would now turn to US President Donald Trump. Powell’s term expires in May, and Trump has repeatedly clashed with the Fed Chair over the latter’s refusal to cut rates more aggressively, at one point calling the central bank chief “too stupid,” and threatening to fire him.
“Without a bearish catalyst, crypto markets are likely going to hold here until May 2026 when Fed policy shifts,” Magadini said.
Bitcoin plunged at the end of October after hitting an all-time high of $126,080.
Although it surged after Trump’s victory in the 2024 elections, the biggest digital asset has struggled in part due to the president’s trade war, political upheaval, and a lack of liquidity in the digital asset markets.
Like equities, Bitcoin and other crypto assets have typically performed well in a low-interest rate environment. Crypto traders have banked on the Federal Reserve cutting rates to boost digital assets, and crypto prices briefly dropped in November when investors began to fear the Fed would pause its rate-cutting campaign.
The Federal Reserve started aggressively raising rates in 2022 in a bid to control 40-year-high inflation spurred by the COVID-19 pandemic. Bitcoin and other cryptocurrencies were hit by the tightening.
The central bank repeatedly cut rates in 2024 but has been hesitant to aggressively lower them this year, citing President Trump’s trade war and sticky inflation.
Trump has said he has already chosen the person he will nominate to succeed Powell. Polymarket bettors give Trump ally Kevin Hassett overwhelming odds to lead the central bank after Powell.
