Crypto markets shrug off Fed’s contentious third straight rate cut
The Federal Reserve enacted a 25-basis-point rate cut — its third consecutive reduction — lowering the federal funds rate to 3.50%–3.75%. The decision exposed sharp divisions within the Federal Open Market Committee between inflation-focused hawks and labor-market-focused doves, and was the fourth vote in a row without unanimous support. Chair Jerome Powell’s term ends in May, adding uncertainty about future policy direction as a successor is expected to be named by President Trump. Major cryptocurrencies barely reacted: Bitcoin traded around $92,900 (up ~0.2% for the week, down ~1.3% on the day) and Ethereum near $3,396 (up ~0.7% daily, +8.5% weekly). Historically, rate cuts tend to support risk assets including crypto, but the visibly split Fed and unclear path for further cuts leave market participants cautious. For traders, the immediate takeaway is muted price movement amid policy uncertainty — watch for volatility around future Fed meetings and the impending change in Fed leadership.
Neutral
The news is categorized as neutral because the rate cut is typically supportive of risk assets, but the market reaction was muted and the Fed showed clear internal divisions. Immediate price moves were small: BTC and ETH barely changed on the day. Key reasons supporting a neutral view: 1) Directional ambiguity — a 25bp cut is dovish, but split voting and uncertainty over Powell’s successor create unpredictability for future policy. 2) Historical precedent — rate cuts often lift crypto over time, but near-term effects can be muted if the policy path is unclear. 3) Trader behavior — markets have already priced much of the macro news; with calm trading now, expect episodes of volatility around upcoming Fed meetings and leadership announcements rather than a sustained breakout. Short-term: elevated event risk and potential volatility spikes around Fed communications and the chair nomination. Long-term: if cuts continue and the new Fed chair maintains accommodative policy, crypto could trend higher alongside risk assets. Conversely, a pivot back toward hawkish policy would be bearish. Traders should monitor Fed minutes, employment and inflation prints, and political signals about the new chair to adjust risk exposure.