The global cryptocurrency market gained momentum on Thursday after the United States Federal Reserve announced its first interest rate cut of the year, a move long anticipated by investors across risk assets. The overall market capitalization of digital assets climbed 2 percent to reach $4.2 trillion, as Bitcoin approached the $118,000 mark. However, enthusiasm remained tempered by the central bank’s cautious tone on the pace of future monetary easing.
Bitcoin, the world’s largest cryptocurrency, rose 1 percent to $117,426, while Ether advanced 2.8 percent to $4,609. Ripple’s XRP also saw a notable increase of 2.9 percent, trading at $3.10. The gains reflected optimism over easier liquidity conditions but also underscored the hesitation of traders who are balancing expectations of future cuts with the Federal Reserve’s measured stance.
On Wednesday, the Federal Open Market Committee (FOMC) voted 11–1 in favor of lowering its benchmark lending rate by 25 basis points, setting a new range of 4.00 percent to 4.25 percent. The only dissent came from newly appointed governor Stephen Miran, who argued for a more aggressive half-point cut. The move was widely expected, with CME’s FedWatch tool indicating a 96 percent probability of such a reduction ahead of the announcement.
Despite the historic significance of the decision, the market’s immediate reaction was muted. Analysts suggested that investors had already priced in the cut, creating a classic “buy the rumour, sell the news” scenario. Bitcoin futures open interest remained steady, showing no signs of forced liquidations or sudden volatility in the aftermath of the decision.
Fed Chair Jerome Powell described the rate cut as a precautionary measure under the central bank’s “risk-management” framework, making it clear that policymakers were not rushing into an aggressive easing cycle. This deliberate approach cooled expectations for consecutive rate cuts, limiting the upside momentum in digital assets and broader equities alike.
Industry voices remain cautiously optimistic about the long-term impact. Andrew Forson, president of DeFi Technologies, explained that a lower cost of capital ultimately benefits the digital asset ecosystem. “A lower cost of capital indicates more capital flows into the digital assets space because the risk hurdle rate for money is lower,” he said, noting that staking platforms and blockchain-based projects could become more attractive alternatives to fixed-income securities.
For crypto investors, the focus now shifts to upcoming economic data and the central bank’s October meeting, which could provide clearer signals on whether this cut marks the beginning of a broader policy pivot. Historical trends suggest that rallies may take time to materialize. For instance, after the December 2024 rate cut, Bitcoin experienced only a brief spike before consolidating, with stronger gains emerging weeks later.
Still, several analysts remain bullish. Tom Lee of BitMine has projected “monster gains” for Bitcoin and Ether over the next quarter if the Federal Reserve continues on an easing trajectory. Until then, traders appear content to balance optimism over improved liquidity with Powell’s warning that the Fed will proceed carefully.
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