Federal Reserve Cuts Rates Amidst Internal Division & Market Caution

Federal Reserve Governor Stephen I. Miran hinted at further rate cuts in December, citing concerns over labor market risks amid current restrictive policies.

This has implications for monetary policy impacts on digital assets, affecting Bitcoin and Ethereum as investors anticipate looser economic conditions.

Federal Funds Rate Drops Amid Policy Disagreements

The Federal Reserve reduced the federal funds rate to 3.75%-4.00% on October 29, 2025, amid debates on fiscal strategy. Governor Stephen I. Miran recommended an even larger cut, reflecting dovish tendencies and labor market concerns, against some officials advocating caution due to inflation.

Market responses have been varied, with investor sentiment cautious yet optimistic. Cryptocurrency prices, including Bitcoin and Ethereum, often exhibit increased volatility in reaction to such shifts, drawing both speculative and institutional interest as potential benefits from looser monetary policy unfold. The U.S. Treasury Secretary has critiqued this strategy for utilizing outdated methodologies, while market analysts observe potential leadership changes looming at the Fed.

“Our decision to reduce the federal funds rate reflects an assessment of increased downside risks to employment and a recognition of the slower job gains we have observed.” — Jerome H. Powell, Chair, Federal Reserve

Crypto Markets React to Rate Cuts and Economic Signals

Did you know? In 2020 and 2023, rate cut cycles similarly boosted crypto markets, with digital assets experiencing substantial rallies amid increased macro liquidity and risk-on sentiment.

According to CoinMarketCap, Bitcoin currently trades at $109,983.86 with a market cap of 2,193,397,517,326, and a market dominance of 59.24%. Recent 24-hour trading volumes reached 46,706,691,609, with fluctuations showing a 0.11% rise over 24 hours but a decline over 90 days.

Analysts from the Coincu research team note potential regulatory responses and increased institutional scrutiny as pivotal in shaping crypto’s medium-term landscape. Market behaviors suggest that dovish policy leans could support asset allocation shifts favoring digital currencies if the labor market vulnerabilities flagged by the Fed materialize. Historical analysis of similar monetary easing periods hints at a potential positive pull on DeFi and Layer 1 protocols, reminiscent of past investor behavior in expansive liquidity periods.