In a widely anticipated move, the U.S. Federal Reserve cut interest rates by 0.25%, while parts of the market had been betting on a larger 0.50% cut.
What drew even more attention, however, was Fed Chair Jerome Powell’s statement that the central bank sees no need to rush into deeper rate cuts, stressing that future decisions will depend on inflation trends and labor market conditions.
Why This Matters
Interest rates in the U.S. remain the single most influential factor for global capital flows. Higher rates boost the appeal of safe assets like government bonds, while reducing appetite for riskier assets such as equities and cryptocurrencies.
Impact on Bitcoin
- Immediate Volatility: Bitcoin was trading above $117,000 before the Fed’s decision but saw choppy price action afterward, as traders who expected a bigger cut expressed disappointment.
- Medium-Term Pressure: With rates still relatively high, the U.S. dollar is likely to stay strong, putting pressure on Bitcoin.
- Long-Term Opportunity: Still, the beginning of an easing cycle — even if gradual — opens the door for renewed liquidity inflows, which could support Bitcoin in the months ahead.
What the Market Is Watching
- Powell’s Next Speeches: Any hint of faster cuts will immediately affect risk appetite.
- Inflation and Jobs Data: Clear signs of slowing inflation or weaker labor conditions could push the Fed toward more aggressive easing.
- Dollar Strength (DXY): A stronger dollar typically weighs on Bitcoin’s momentum.
- Technical Levels: Traders are closely watching whether Bitcoin can hold the $115,000 support or break through $120,000 resistance.
Bottom Line
Powell’s comments highlight a cautious approach: no rush to cut, but readiness to act if data softens further.
For Bitcoin, that means short-term turbulence, but long-term upside potential if the Fed continues on a path of monetary easing.
