Fed cuts rates 25bps in pivot — what it means for crypto traders
The Federal Reserve cut the federal funds target range by 25 basis points to 3.50–3.75% on Dec. 10, 2025, marking its first clear policy pivot from tightening to easing. The FOMC cited rising employment risks and moderating inflation, noting slower job gains and a slight uptick in unemployment. The statement said downside risks to employment have increased and left the door open for further cuts while maintaining a 2% inflation target. For crypto markets, rate cuts typically lower funding costs, weaken the dollar, and boost appetite for risk assets like Bitcoin. Early price feeds showed a brief positive reaction in Bitcoin, but broader direction will depend on follow-up data — upcoming inflation prints, labor reports — and Fed Chair Jerome Powell’s remarks. Traders should watch whether this is the start of a sustained easing cycle: historically, Bitcoin has tended to outperform during early-stage rate cuts as institutional flows rotate into higher-beta assets. If additional cuts follow, crypto could receive a renewed liquidity tailwind into 2026.
Bullish
A 25bps Fed rate cut is broadly bullish for crypto because easing monetary policy reduces benchmark yields, weakens the dollar, and tends to boost risk asset demand. Historically, early-stage rate cuts have correlated with Bitcoin outperformance as institutional and retail investors reallocate from cash and low-yield bonds into higher-beta assets. The Fed’s emphasis on rising employment risks and an open path to further cuts increases the probability of a sustained easing cycle, which would provide a continued liquidity tailwind for crypto. Short-term volatility is likely: traders should expect immediate reactions around Powell’s press conference and incoming inflation and jobs data. In the medium-to-long term, repeated cuts or a sustained easing trend could support higher risk-on flows, greater leverage in crypto markets, and potential price appreciation for major tokens (notably BTC). Risks remain — if inflation re-accelerates, or if cuts are seen as insufficient, markets can reverse; and a stronger-than-expected dollar or risk-off macro shocks would offset the bullish bias. Overall, the news tilts the balance toward bullish for crypto, contingent on follow-up Fed actions and macro prints.