Fed opens the credit valve: Is Bitcoin about to take off or just a flash in the pan?

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

After 10 long months of patient waiting and watching, the US Federal Reserve (Fed) finally acted. In a decision that was widely anticipated, the world's most powerful central bank cut the federal funds rate by 25 basis points, bringing it to a range of 4-4.25%.

The move, described by Chairman Jerome Powell as a “risk-management cut,” marked the start of a new monetary easing cycle and immediately sparked heated debate in the crypto world: Is this the golden signal bitcoin has been waiting for?

Background to the pivot: US economy signals weakness

The Fed’s decision was not a random one, but a direct response to a series of worrying economic data. Economic growth in the first half of this year has slowed down. More importantly, the labor market, which has been 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. In the press conference, Chairman Powell acknowledged this slowdown, saying it came largely from changes in immigration flows.

Political pressure from President Donald Trump is also a factor that cannot be ignored. He has repeatedly criticized the Fed for its slowness in cutting interest rates. Although Mr. Powell asserted that the Fed is “steadfast in its independence,” the political pressure certainly adds another layer of burden to policymakers.

But Mr. Powell was cautious, noting that inflation had recently rebounded and remained elevated. He also expressed reservations about the impact of new tariffs, suggesting they could complicate the path to the 2% inflation target.

This shows that the Fed is walking a delicate line between supporting a weakening economy and containing persistent inflation.

Major cryptocurrencies barely reacted to the Fed's rate cut as the market had already anticipated it (Photo: CoinGape).

Market Reaction: A Predicted 'Indifference'

The reaction in the risk asset market was muted immediately after the announcement. Bitcoin (BTC) briefly jumped over 1%, then quickly reversed and fell 1.5%, trading around $115,000/BTC. Major US stock indexes and gold also followed suit, spiking for a few minutes before plummeting.

This “indifference” is not difficult to understand. With investors on the Polymarket floor betting on the probability of a rate cut as high as 93% in advance, the Fed’s move was almost completely “priced” into the market. There was no element of surprise, no shock, and therefore, no major volatility.

Cryptocurrency stocks also showed some divergence. Big names like Coinbase (COIN) and MicroStrategy (MSTR) fell slightly, while some smaller-cap stocks that hold bitcoin surged, suggesting a retail rotation rather than a broad-based wave of buying.

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

“Re-pricing risk is now in the spotlight, creating an asymmetrical landscape for bitcoin. While today’s cut is just a spark, it’s the path implied by the Fed’s forecast charts that could pave the way for bitcoin to challenge new highs later this year,” said Matt Mena, Strategist at 21Shares.

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

The Fed’s latest dot plot, while showing a split, still points to two more cuts this year. “The Fed is under pressure to be more dovish, and that’s good for risk assets,” says Chris Rhine of Galaxy.

"Cold water" from Wall Street

However, not everyone is celebrating, with many veteran Wall Street analysts warning that being too optimistic about the Fed's move could be a mistake.

“The Fed rate cut is a catalyst, not a turning point for the market,” said Ira Auerbach, former head of digital assets at Nasdaq. He said it was a supportive factor, but not enough to create a sustainable uptrend.

An anonymous trader who goes by the name IronLedger put it more bluntly: “The rate cut is just a sugar rush. It doesn’t address the structural liquidity or regulatory issues in the crypto industry. Retail investors are still on the sidelines, institutions are still cautious, and a 25 basis point cut doesn’t erase two years of tightening policy.”

This view holds that the health of the cryptocurrency market depends on more internal factors than monetary policy alone. Issues such as unclear regulatory frameworks, the lack of breakthrough applications that attract mass users, and the reluctance of institutional capital are the real barriers. A small interest rate cut cannot solve these core challenges.

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

In fact, the Fed’s move removes one of the biggest headwinds that has held markets back for nearly two years. The macro environment is becoming more friendly. The Fed’s projections suggest that interest rates could fall to 3.6% by 2025, signaling a long path of easing ahead. This is a necessary condition and a fundamental foundation for risk assets to thrive.

Whether bitcoin can take advantage of this opportunity to break out, however, depends on the cryptocurrency industry itself. Will there be breakthrough technological advances? Will regulations in the US and other regions become clearer and more open? Will investor confidence, both retail and institutional, return?

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

The crypto winter may be over, but the real spring of the market will only come when the underlying problems are solved.

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