The Fed opens the credit tap: Is Bitcoin about to take off or just a fleeting boost?

(Dan Tri Newspaper) - The Fed has just lowered interest rates for the first time in 10 months, sparking hope in the cryptocurrency market. But the question is whether this boost is sustainable or just a fleeting "sweet spot"?

After ten long months of patiently waiting and observing, the US Federal Reserve (Fed) finally acted. In a decision that the entire market had anticipated, the world's most powerful central bank lowered the federal funds rate by 25 basis points, bringing it to a range of 4-4.25%.

This move, described by Chairman Jerome Powell as a “risk management cut,” marks the beginning of a new cycle of monetary easing and immediately ignited heated debates in the cryptocurrency world: Is this the golden signal that bitcoin has been waiting for?

The context for the shift: The US economy is showing signs of weakness.

The Fed's decision was not a random event but a direct response to a series of worrying economic data. Economic growth slowed in the first half of this year. More importantly, the labor market, a solid pillar of the US economy, is showing clear signs of weakness.

The August jobs report recorded only 22,000 new jobs, an alarmingly low number, while the unemployment rate climbed to 4.3%—the highest level since 2021. At a press conference, Chairman Powell acknowledged this slowdown, attributing it largely to changes in immigration patterns.

Political pressure from President Donald Trump is also a factor that cannot be ignored. He has repeatedly criticized the Fed's delay in cutting interest rates. Although Powell insists the Fed is "steadfast in maintaining its independence," political pressure has undoubtedly added another layer of burden to policymakers.

However, Powell was very cautious. He stressed that inflation had recently risen again and remained high. He also expressed reservations about the impact of the new tariff policies, implying that they could further complicate the path to bringing inflation down to the 2% target.

This shows that the Fed is walking a tightrope, having to both support a weakening economy and curb persistent inflation.

Major cryptocurrencies showed little reaction to the Fed's interest rate cut because the market had already anticipated it (Image: CoinGape).

Market reaction: A foretold "indifference".

Immediately after the announcement, the reaction in risky asset markets was rather subdued. Bitcoin (BTC) saw a slight jump of over 1%, then quickly reversed course and fell 1.5%, trading around $115,000/BTC. Major US stock indices and gold also followed a similar pattern, surging for minutes before plummeting.

This "indifference" is not difficult to understand. With investors on the Polymarket exchange having already bet on a 93% probability of a rate cut, the Fed's move was almost entirely "priced" into the market. There was no surprise, no shock, and therefore, no major volatility.

The stock market related to cryptocurrencies also showed divergence. Big names like Coinbase (COIN) and MicroStrategy (MSTR) saw slight declines, while some smaller-cap stocks holding bitcoin surged. This suggests a rotation of small-scale capital rather than a widespread, consensus-building wave of buying.

However, despite the initial reaction, optimists believe this is just the beginning. For them, the 25 basis point cut itself is less important than the message it sends: the monetary tightening cycle is over and an era of cheaper money is beginning.

Matt Mena, strategist at 21Shares, commented: "Repricing risk is now the focus, creating an asymmetrical playing field for bitcoin. While today's rate cut is just the spark, it is the implied trajectory from the Fed's forecast charts that could pave the way for bitcoin to challenge new price highs later this year."

In theory, a lower interest rate environment benefits scarce and non-yielding assets like bitcoin. It reduces the opportunity cost of holding cryptocurrency compared to safer assets like government bonds. As interest rates on bank deposits fall, investors will tend to seek out riskier assets in search of higher returns.

The Fed's latest interest rate forecast chart (dot plot), while showing divergence, still leans toward the possibility of two more rate cuts this year. Chris Rhine from Galaxy believes that: "The Fed is under pressure to lean toward a more dovish stance, and this benefits riskier assets."

A "cold shower" from Wall Street.

However, not everyone shares the same joy. Many veteran Wall Street analysts warn that being overly optimistic about the Fed's move could be a mistake.

Ira Auerbach, former head of Digital Assets at Nasdaq, stated: "The Fed's interest rate cut is a catalyst, not a turning point for the market." According to him, it's a supporting factor, but not enough to create a sustainable uptrend.

An anonymous trader using the pseudonym IronLedger offered an even more blunt assessment: “The interest rate cut is just a sweet shock. It doesn’t solve the structural liquidity or regulatory problems in the cryptocurrency industry. Retail investors are still on the sidelines, institutions are still cautious, and a 25 basis point cut can’t erase two years of tightening.”

This perspective argues that the health of the cryptocurrency market depends on more internal factors than simply relying on monetary policy. Issues such as an unclear legal framework, a lack of groundbreaking applications to attract mass users, and the reluctance of new institutional capital flows are the real obstacles. A small interest rate cut cannot solve these core challenges.

So, what is the path forward for bitcoin and the cryptocurrency market?

In fact, the Fed's move has removed one of the biggest headwinds that has held back the market for almost two years. The macroeconomic environment is gradually becoming more favorable. The Fed's forecast suggests interest rates could fall to 3.6% by 2025, signaling a long road of easing ahead. This is a necessary condition and a fundamental basis for the growth of risky assets.

However, whether Bitcoin can capitalize on this opportunity to break through depends on the cryptocurrency industry itself. Will there be groundbreaking technological advancements? Will regulations in the US and other regions become clearer and more open? Will investor confidence, both retail and institutional, return?

The Fed's interest rate cut is a potential "solution" for cryptocurrencies, but it's not a magic bullet. It opens a door of hope, but to step through that door and reach new heights, the cryptocurrency market needs to stand on its own two feet.

The crypto winter may be over, but the market's true spring will only arrive when the underlying problems are resolved.

Source: https://dantri.com.vn/kinh-doanh/fed-mo-van-tin-dung-bitcoin-sap-cat-canh-hay-chi-la-cu-hich-chong-tan-20250918153840711.htm