Simply put
- The Federal Reserve hasn’t adjusted interest rates since last December.
- US President Donald Trump is pressuring the Fed to lower interest rates.
- Cryptocurrencies and other assets often benefit from lower rates that enhance financial liquidity.
The US Central Bank’s anticipated decision led to a 0.25% cut in federal funds on Wednesday. This change comes amid ongoing pressure from President Trump, as there are signs suggesting the economy may need some support.
Following the announcement, Bitcoin and other significant digital assets showed minimal price movement. Recent data indicated that Bitcoin was trading just above $116,000, reflecting a slight increase of 0.2%. Investors seem to be pricing in these anticipated decisions.
Ethereum, the second-largest cryptocurrency by market cap, remained steady at around $4,501 during the same period.
The Fed lowered interest rates to a range of 4% to 4.25% after a report from the Department of Labor revealed that the US had created 911,000 fewer jobs than previously estimated over the past year. Other economic indicators also contributed to concerns. “Uncertainty about the economic outlook continues to rise,” the Fed acknowledged in a statement.
These worries seem to overshadow inflation concerns, which have climbed to 2.9% per year, surpassing the Fed’s long-held 2% target. Newly appointed Governor Stephen Milan opposed the rate cut, arguing for a more significant reduction of 0.50%.
The Fed’s dual mandate includes maintaining low inflation and promoting full employment.
Noelle Acheson, the author of the “Crypto Is Macro Now” newsletter, mentioned in a message that the most noteworthy news wasn’t just the anticipated rate cuts, but the revised economic forecasts from Fed officials, signaling increasing anxiety over employment prospects.
Acheson highlighted that this day was significant not only for the rate cuts but also for updated forecasts indicating that the Federal Open Market Committee (FOMC) is increasingly concerned about its employment outlook, suggesting two more rate cuts by the end of this year.
Additionally, Acheson noted another dissenting opinion, with Michelle Bowman and Christopher Waller expressing their belief that a 25 basis point cut was sufficient.
Central bank officials kept rates steady during five meetings earlier this year due to inflation concerns. As price increases slowed, the banks reduced rates with three cuts in late 2024, leading to heightened expectations for further reductions.
In light of potential economic difficulties for his administration, Trump has criticized the Fed for not aligning with his preferences and has attempted to install more favorable officials. Recently, Milan was sworn in after the resignation of Adriana Kugler, providing continuity for the next several months.
A federal court recently intervened to prevent the firing of Governor Lisa Cook, seen as an obstacle to lower interest rates, with many believing she supports a less constrained monetary policy. Trump has also openly criticized Fed Chairman Jerome Powell.
The CME’s FedWatch tool indicates a 96% likelihood of an interest rate cut leading up to a decision.
However, investor sentiment seems to be shaped more by the ongoing tensions raised by the administration and the broader economic uncertainties, including Trump’s trade policies. Gold, often viewed as a safe haven, surged to over $3,730 on Tuesday, witnessing a more than 10% increase in a month.
Interestingly, many market participants believe that nearly nine out of ten think Bitcoin, often compared to gold, will surpass $105,000 by the end of September.
In her newsletter, Acheson also noted updated forecasts reflecting the Fed’s approach towards unemployment and inflation following Wednesday’s meeting, hinting at potential market reactions.
She mentioned that the upcoming Fed statements will be carefully scrutinized for indications of a shift in approach, with much invested in their wording.
Updated (September 17, 2025, 2:35pm): Added details on Acheson’s comments, Fed statements, and voting specifics.
