Bitcoin and Ethereum shrug off the central bank’s interest rate cut

The US central bank cut interest rates by 0.25% on Wednesday, a widely expected move that left crypto markets largely unfazed.

Bitcoin was trading at approx $111,700, down 3% in the last 24 hours. The largest cryptocurrency by market cap has fallen more than 10% after falling below $105,000 earlier this month. Ethereum, the second-largest digital asset by market value, changed hands at about $4,000, down 3.2% since the same time Tuesday.

“Today’s decision to cut the Federal Funds Rate by another 25 basis points was long overdue,” Gerry O’Shea, head of global market insights at crypto asset manager Hashdex, wrote to Declutter. “For bitcoin and other digital assets, this expected move should not have a significant short-term impact on prices.”

O’Shea added that other factors including “the government shutdown, tariff policies and earnings reports from some major tech companies may have more influence on prices this week.”

Central bankers cut the rate banks charge each other for overnight lending of reserves held at the Fed to a range between 3.75% and 4% after jobs data and other economic indicators pointed to a slowing U.S. economy.

“…In light of the shift in the balance of risk, the Committee has decided to lower the target margin,” the Fed said in a statement.

As at the Fed’s previous monetary meeting, the vote was not unanimous. Stephen Miran, recently appointed by the White House to the Fed’s Board of Governors, voted for a 0.50% cut, as he did in September. Jeffrey Schmid voted to leave interest rates unchanged.

An interim jobs report from the Chicago Fed last month showed unemployment remained around 4.3%, the highest level in four years. On Tuesday, the Conference Board’s Expectations Index, a widely watched measure of economic sentiment, remained below the threshold that typically indicates a coming recession.

The Federal Reserve’s concerns outweighed those about inflation, which remained stubbornly above the bank’s target of 2% per year. The consumer price index rose 3% in the 12 months through September, the Bureau of Labor Statistics said, continuing an upward trend that began after a 2.3% increase in April.

On Tuesday, the CME FedWatch Tool, which uses futures trading data to infer trader sentiment, predicted a greater than 99% probability of a 0.25% rate cut. On Myriad, a prediction market that typically offers more conservative predictions, it found that about 90% of respondents were expecting the same. (Disclaimer: Myriad is part of Dastan, the parent company of an editorially independent company Declutter.)

Investors awaited comments from Fed Chairman Jerome Powell on ending the bank’s quantitative tightening. The bank is unloading Government bonds and mortgage-backed securities, as it aimed to strengthen financial markets and control inflation a few years ago when the economy was on shakier ground.

A turn to less restrictive monetary policy with a higher tolerance for inflation, coupled with lower interest rates that inject liquidity into markets, could strengthen Bitcoin and other risk assets, some analysts said ahead of the Fed’s decision.

Last month the Fed cut the federal funds rate by 0.25%, the first cut since last year. The earlier inaction had angered US President Donald Trump, who, fearing being associated with an economic crisis, regularly criticized Powell and threatened to fire him.

Hashdex’s O’Shea wrote that while digital asset markets may remain volatile for the foreseeable future, investor demand for exchange-traded funds, an improved regulatory environment in the US “continues to support our view that Bitcoin could surpass its previous all-time high later this year.”

UPDATE (October 29, 2025, 2:28 PM ET): Adds Fed and Hashdex comments and voting details.