Key Rates: The Fed Finally Gives In and Markets Stir

What had to happen happened. After weeks of repeated pressure from the president himself, the FED finally lowered its key rates. The decision, expected but closely watched, caused a splash in the financial pond. Investors are now observing the repercussions of this cut on the markets, and especially on the crypto ecosystem, which lives to the rhythm of global liquidity flows.

The Fed cuts by 25 points: Trump cheers, Powell tempers

Following its meeting on September 17 , the FED lowered its key rate by 25 basis points, establishing a new range between 4% and 4.25%. It’s the first cut since December 2024. The decision, voted by 11 members against 1, reflects rising risks to employment, even though inflation remains “somewhat elevated.” 

In its official statement , the FED acknowledged: “Job gains have slowed and the unemployment rate has risen slightly but remains low. Inflation has increased and remains somewhat elevated.”

But politically, the atmosphere is tenser. Donald Trump, on Truth Social, criticized Jerome Powell’s hesitation : 

Too late! Interest rates must be cut now, and much more than he had imagined. The real estate market will explode!!! 

A tug-of-war that once again illustrates the blurred line between monetary independence and presidential pressure. 

Immediate result: the dollar weakened, bitcoin fluctuated around 116,000 dollars (-0.6%) and ether held steady at 4,491 dollars.

When liquidity reignites the risky asset game

Lower rates make traditional investments less attractive. Investors then turn to risky assets such as crypto. For Thomas Perfumo, economist at Kraken, the biggest is yet to come: 

While the Fed Funds rate is 100 basis points below its 2024 peak (525–550 basis points), the real story lies in the next wave of rate cuts.

The FED expects two more cuts before the year’s end, enough to make crypto markets smile. Matt Hougan, Chief Investment Officer at Bitwise, compares the current wait to a Super Bowl pregame, where everything seems ready for a spectacular year-end rally. He points out that the combination of rate cuts, inflows to crypto-linked financial products, concerns around the dollar, and the momentum of tokenization lays the groundwork for an explosive scenario.

For stablecoins, the rate cut is not a hindrance. Chris Perkins (CoinFund) emphasizes: the demand for yield on stablecoins increases when rates fall, as investors always seek a dollar gateway into the DeFi .

The next 100 points: the real time bomb for crypto

Markets know it’s not today’s cut that changes everything, but the following ones. Perfumo stressed the convexity effect of the rates: each additional cut has an exponential impact on asset prices. In short, the next 100 points could completely reshape the crypto landscape.

Risks exist. A too rapid cut could weaken the dollar and reignite inflation. Conversely, a too slow pace could stifle recovery. But crypto positions itself as a credible alternative, be it for bitcoin, ether or stablecoins.

Some numerical benchmarks:

• $116,000: bitcoin price at the time of the announcement, slightly down by 0.6%;
• $4,491: Ethereum price, up 0.26% over 24h;
• 35%: share of USDT holders who use it as a savings vehicle;
• 63%: proportion of crypto transactions passing through USDT;
• 2: number of additional rate cuts planned by the FED before the end of 2025.

This dynamic does not go unnoticed: the FED has scheduled a conference next month dedicated to stablecoins and tokenization. A sign that the USA now integrates crypto at the very heart of their monetary thinking.

The light seems to be appearing on the horizon, at least if you believe Trump’s vision. For him, a rate cut equals growth, regardless of the risks. For its part, the FED has already shown some flexibility, recently easing its control over banks active in crypto . A sign that, despite tensions, the rapprochement between traditional finance and digital assets continues.