Bitcoin, Ethereum Shrug Off Central Bank’s Interest Rate Cut

The U.S. central bank slashed the interest rate 0.25% on Wednesday, a widely expected move that left crypto markets largely unimpressed. 

Bitcoin was trading at about $111,700, down 3% over the past 24 hours. The largest cryptocurrency by market capitalization has sagged more than 10% after dropping below $105,000 earlier this month. Ethereum, the second-largest digital asset by market value, was changing hands at about $4,000, a 3.2% decline gain since Tuesday, same time.

“Today’s decision to drop the federal funds rate another 25 basis points was highly anticipated,” Gerry O’Shea, head of global market insights at crypto asset manager Hashdex, wrote to Decrypt. “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 a number of large tech companies may have more of an effect on prices this week.”

Central bankers dropped the rate that 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 risks, the Committee decided to lower the target range,” the Fed said in a statement.

As was the case in the Fed’s previous monetary meeting, the vote was not unanimous. Stephen Miran, a recent White House appointee to the Fed Board of Governors, voted for a 0.50% cut as he did in September. Jeffrey Schmid voted to keep the rate unchanged.

An interim September jobs report by the Chicago Fed last month showed unemployment remaining around 4.3%, a four-year high. On Tuesday, the Conference Board’s Expectations Index, a widely watched measure of economic sentiment remained below the threshold that typically signals a coming recession.

The Federal Reserve’s concerns trumped those about inflation, which has remained stubbornly above the bank’s target of 2% annually. 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% reading in April. 

On Tuesday, the CME FedWatch Tool, which uses futures trading data to infer trader sentiment, predicted a more than 99% probability of a .25% rate cut. On Myriad, a prediction market that tends to offer a more conservative forecast, showed about 90% of respondents expecting the same. (Disclaimer: Myriad is a unit of Dastan, the parent company of an editorially independent Decrypt.)

Investors awaited Fed Chair Jerome Powell’s comments on ending the bank’s quantitative tightening. The bank has been unloading Treasuries and mortgage-backed securities as it aimed to bolster financial markets and wrestle inflation under control a few years ago when the economy was on shakier ground. 

A turn toward less restrictive monetary policy with a higher tolerance for inflation, coupled with lower rates injecting liquidity into markets, could bolster Bitcoin and other risk-on assets, said some analysts in the run-up to the Fed’s decision. 

Last month, the Fed slashed the federal funds rate by 0.25%, its first cut since last year. The previous inaction had angered U.S. President Donald Trump, who, fearful of being associated with an economic cratering, criticized Powell regularly and threatened to fire him. 

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

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