The 25-basis-point cut marks the first time the U.S. Federal Reserve has lowered its policy rate since December 2024.
Bitcoin Briefly Shoots Past $116K After Fed Cuts Rates
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Fed Cut Sends Bitcoin Above $116K, but Not for Long
Wednesday’s interest rate cut by the U.S. Federal Reserve wasn’t much of a surprise, after all, just minutes before the announcement, the CME Group’s Fedwatch Tool showed a 96% chance of a 25-basis-point cut and a 4% probability of a larger 50-basis-point reduction. But markets wanted to see the real thing and though many said the cut had already been priced in, bitcoin ( BTC) still jumped on the news, reclaiming $116K before quickly retreating to $115K.
The likelihood of a lower policy rate shot up last week after employment data surprised economists with a record surge in new unemployment claims. Then Trump nominee Stephen Miran was confirmed as one of seven Federal Reserve Board governors yesterday, increasing the odds of today’s cut. Miran participated in the central bank’s meeting and was the only committee member calling for a 50-basis-point reduction.
But even with the first interest rate cut in nearly a year confirmed, BTC is still treading water in the $115K-$116K range. Many are expecting further reductions by the Fed when it reconvenes in October and December later this year, which may be the last shot at a final 2025 BTC rally.
“The Committee is attentive to the risks to both sides of its dual mandate and judges that downside risks to employment have risen,” the Fed announced in its Wednesday press release. “In support of its goals and in light of the shift in the balance of risks, the Committee decided to lower the target range for the federal funds rate by 1/4 percentage point to 4 to 4.25%.”
U.S. President Donald Trump, who is on a state visit to the United Kingdom, didn’t react immediately to the cut. The president has pilloried Fed Chair Jerome Powell for not reducing rates and even attempted to fire Fed Governor Lisa Cook, a Biden-era appointee, on allegations of mortgage fraud. Adriana Kugler, another Biden-nominated former Fed governor, mysteriously quit amid the drama.
Overview of Market Metrics
Despite the interest rate reduction, bitcoin was still down roughly 1.00% over 24 hours at $115,143.95 at the time of writing, according to Coinmarketcap data. The cryptocurrency’s price has been trading between $114,803.05 and $117,328.61 since Tuesday.
Twenty-four-hour trading volume was up 8.02% at $49.45 billion, but market capitalization much like price dipped to $2.3 trillion, a slight 0.95% retreat. Bitcoin dominance was initially stagnant over much of the day, but eventually fell 0.37% to arrive at 58.09%.
Total bitcoin futures open interest dipped 0.71% since yesterday, coming in at $83.07 billion according to data from Coinglass. Bitcoin liquidations for the past 24 hours reached a grand total of $25.39 million. Long liquidations of $14.51 million made up most of that sum, with the remaining $10.88 million consisting of shorts.
