Investor Confidence Fluctuates Following Fed Rate Reductions, Impacting Cryptocurrency Markets

The Federal Reserve’s quarter-point rate cut on Wednesday drew varied responses throughout the cryptocurrency sector, with

as well as alternative coins such as and experiencing significant price shifts. The central bank’s updated projections, including an altered inflation estimate for 2025, have added complexity for market participants. The new target policy rate is now set at 4.00% to 4.25%, after unanimous approval from the Federal Open Market Committee (FOMC), with 11 out of 12 members backing the reduction.

Following the Fed’s announcement, Bitcoin climbed above $117,000, buoyed by increased risk appetite. This momentum was further fueled by a more optimistic economic outlook and the Fed’s signal that two more rate cuts are likely this year. Technical analysis revealed a strengthening upward trend, as the Relative Strength Index (RSI) rose to 61 from its late August low of 37. Investors are now looking for confirmation from the SuperTrend indicator, which could validate a sustained breakout above $120,000—a threshold not seen since August.

Ethereum responded positively as well, with its price consolidating near $4,600. Despite modest outflows in its spot ETFs on Wednesday, the prevailing trend points to a potential approach toward its all-time high of $4,956. The 50-day, 100-day, and 200-day Exponential Moving Averages (EMAs) currently function as support zones for Ethereum. The RSI at 57 also indicates room for further gains. On the downside, if institutional sentiment remains subdued and exposure is reduced, prices could slip below $4,229 before another attempt to rally.

XRP, another major altcoin, strengthened as buyers reclaimed the $3.00 psychological milestone. The RSI rebounded to 58 from 51 early in the week, supporting short-term bullish momentum. A move above $3.18 could pave the way toward $3.50 and potentially retest the record high of $3.66. While XRP's trajectory is closely watched amid broader market optimism, investors are urged to remain cautious due to the potential for volatility and profit-taking.

Across the broader market, the interaction between ETF flows and asset pricing remains a focal point. On January 14, 2025, Ethereum ETFs recorded net inflows of $1.1527 million, boosting their cumulative total to $2.414 billion. Conversely, Bitcoin ETFs saw $209.82 million in outflows, with notable reductions from prominent funds such as

and FBTC. These trends illustrate shifting investor sentiment and institutional strategies, as Ethereum ETFs attract stronger inflows and increasing market confidence.