Fed Rate Cut and QT End Boosts Crypto Liquidity & BTC/ETH
In October 2025, the Federal Reserve delivered a 25 basis-point Fed rate cut, lowering its target range to 3.75–4.00%. It also confirmed the end of quantitative tightening (QT) on December 1. This shift reflects slowing inflation and softer labor conditions.
The Fed rate cut and QT halt have boosted crypto liquidity. Bitcoin (BTC) held above $110,500 while Ethereum (ETH) hovered near $4,000. Analysts anticipate renewed ETF inflows and higher stablecoin demand in a lower-rate environment. These measures are expected to enhance crypto liquidity further and provide a tailwind for Bitcoin and Ethereum.
Traders now assign an 87% probability to another rate reduction by year-end and await Fed Chair Powell’s remarks for further policy guidance. Elevated uncertainty may spur short-term volatility but overall support a gradual, liquidity-driven rally in risk assets.
Bullish
The Fed rate cut and cessation of quantitative tightening increase liquidity in financial markets, offering a clear bullish catalyst for Bitcoin and Ethereum. Higher crypto liquidity supports renewed ETF inflows and stablecoin issuance, driving demand for BTC and ETH. In the short term, traders may see increased volatility around Fed Chair Powell’s remarks and inflation data. Over the longer term, the supportive monetary stance underpins a gradual, liquidity-driven rally in cryptocurrencies.