The global crypto market cap rose 2% to $4.2 trillion on Thursday, driven by Bitcoin’s steady climb toward $118,000. The rise followed the Federal Reserve’s first interest rate cut of the year.
However, gains remained limited as investors weighed the Fed’s cautious guidance on monetary policy.
Bitcoin added 1% to trade at $117,426. Ether advanced 2.8% to $4,609, while XRP gained 2.9% to $3.10.
Details of the Fed Decision
On Wednesday, the Fed voted 11–1 to cut its benchmark lending rate by 25 basis points to a range of 4.00%–4.25%. Newly appointed governor Stephen Miran dissented, favoring a larger half-point cut.
Futures markets had widely anticipated the move. CME’s FedWatch tool showed a 96% probability of a quarter-point cut before the meeting. That advance positioning set up a “buy the rumour, sell the news” environment, muting the immediate effect on crypto and other risk assets.
Powell’s Cautious Tone
Fed Chair Jerome Powell framed the cut as a precautionary “risk-management” step. He stressed that policymakers were not rushing into an easing cycle.
His language dampened expectations for aggressive rate reductions. As a result, short-term enthusiasm in crypto markets remained subdued.
Analysts’ View on Crypto Outlook
Analysts still see long-term benefits. Andrew Forson, president of DeFi Technologies, said lower borrowing costs will eventually attract more capital into digital assets.
“A lower cost of capital reduces the hurdle rate for money,” he explained. “That makes staking products and blockchain projects more appealing than traditional bonds.”
Traders Stay Cautious
For now, the crypto response has been muted. Bitcoin futures open interest held steady, showing no liquidation cascades after the Fed’s decision.
Traders are watching upcoming economic data and the Fed’s October meeting to assess whether this cut signals the start of a broader easing cycle.
History Points to Delayed Rallies
Past trends suggest crypto rallies may take time to build. After a December 2024 rate cut, Bitcoin spiked briefly, then consolidated before posting stronger gains weeks later.
BitMine strategist Tom Lee predicts “monster gains” in Bitcoin and Ether over the next quarter if the Fed continues easing.
Until then, traders appear cautious, balancing improved sentiment with Powell’s warning against moving too quickly.
