Federal Reserve Rate Cut Expectations Impact Crypto Markets

As of September 28, 2023, CME’s “FedWatch” tool indicates an 87.7% likelihood of a 25 basis point rate cut by the Federal Reserve in October.

This anticipated reduction significantly influences the valuation of risk assets, potentially affecting Bitcoin, Ethereum, and other cryptocurrencies sensitive to monetary policy shifts.

Rate Cut Predictions Signal Shift in Crypto Markets

The CME FedWatch data, as of September 28, 2025, highlights the market’s anticipation of a 25 basis point interest rate cut at the upcoming October FOMC meeting. Investors are similarly gauging the implications of a possible 50 basis point decrease by December. Federal Reserve Chair Jerome Powell has yet to comment publicly about potential rate changes, consistent with the Fed’s data-driven approach to monetary adjustments.

Lower interest rates traditionally affect risk asset valuations, potentially increasing demand for cryptocurrencies and decentralized finance (DeFi) projects. Institutional and retail investors might find capital more accessible in DeFi lending and trading environments. However, primary projects like Aave, Compound, and Lido have not announced immediate protocol adjustments.

“If the Fed has to cut rates, macro assets will scream. Crypto is still the fastest horse.” — Raoul Pal, CEO, Real Vision

Bitcoin Price Dynamics Amid Federal Reserve Speculations

Did you know? CME’s FedWatch tool has historically enhanced trader insights on impending interest rate alterations, influencing asset volatility during such uncertain periods.

Bitcoin (BTC) is trading at approximately $109,828.58, reflecting a modest 0.46% rise over 24 hours. Its market dominance stands at 57.88%, with a market cap of $2.19 trillion, as per CoinMarketCap. The 24-hour trading volume showed significant reduction, falling by 33.04%. Recent trends depict a -4.99% weekly dip despite a 2.66% increase over 90 days.

Experts at Coincu underscore potential regulatory vigilance with looming rate cuts, impacting crypto liquidity dynamics. Historical patterns suggest rate easing might trigger crypto market rallies, albeit with risk hedging strategies shaping trader behavior in forthcoming sessions.