Investors Wager Heavily as Fed’s Looser Policy Sparks Optimism in Cryptocurrency Markets

Bitcoin surged after the U.S. Federal Reserve indicated it would implement a 25-basis-point interest rate cut at its September 16–17 meeting. This marks the first instance of monetary easing in the current cycle, fueling optimism across risk assets. The move, which had been largely priced in by investors, was supported by CME Group’s FedWatch data, assigning a 96% likelihood to the 25-basis-point cut, which would set the target range to 4.00%–4.25%. As a result,

broke past $116,000, and rose to $4,650, with both seeing improved attitudes in the options markets.

This rate decrease is anticipated to boost market liquidity and put pressure on the U.S. dollar, conditions that have historically been supportive for Bitcoin, often considered a hedge against the loss of fiat currency value. Prior to the Fed’s decision, the U.S. Dollar Index dropped, while stock markets touched new highs, reflecting expectations of monetary easing. Meanwhile, ETF inflows for both Bitcoin and Ethereum remained robust: Bitcoin ETFs saw an uninterrupted seven-day streak with about $292 million in net inflows as of September 10. However, inflows into Ethereum ETFs have decelerated, with average daily outflows of $62 million, a sign of some caution ahead of the Fed announcement.

Market analysts offered differing opinions about the implications of the rate cut. Optimists pointed to increased liquidity and continued ETF inflows as drivers for further gains, while pessimists cautioned about heightened volatility and the risk of stagflation. Some specialists observed that previous periods of Fed easing, such as in 2019 and 2020, had provided a boost to Bitcoin. Still, the current economic context—marked by persistent inflation, decelerating job creation, and ongoing worries about stagflation—may restrict how long any rally may last.

On-chain statistics from CryptoQuant revealed a mix of investor behaviors. Exchange inflows for both Bitcoin and Ethereum have declined to multi-month lows, and the average Bitcoin deposit shrank by half between July and September, indicating that major holders are selling less. Simultaneously, there was a notable increase in stablecoin activity, especially for

(USDT), pointing to investors amassing liquidity in anticipation of a dovish Fed outcome. Additionally, inflows into altcoins climbed, potentially reflecting either speculative bets or profit-taking ahead of the Fed’s move.

Options market data underscored changing trader sentiments. The seven-day call/put skew for Bitcoin nearly returned to a neutral stance, indicating a more balanced mood among investors. This represented a reversal from the previous week, when there was heavy demand for put options as protection against declines. Ethereum showed a similar shift, with its skew improving and suggesting less concern about price drops among leading cryptocurrencies. These changes coincided with Bitcoin’s recent 4% weekly gain and another test of significant resistance levels.

Both retail and institutional investors are urged to stay prudent in this volatile environment. Specialists advise keeping leverage low, maintaining diversified portfolios, and being ready for swift changes in sentiment during Fed week. Altcoins, in particular, are seen as more exposed to sudden corrections, with projections of 15–20% declines in assets such as

and if the market turns negative. There is also a small 6.2% chance of a surprise 50-basis-point cut, which could prompt a more intense relief rally, but might also lead to a reconsideration of broader economic risks.

Ultimately, the market will closely analyze the Fed’s post-meeting statement and Chair Jerome Powell’s remarks for direction. A more accommodative message could strengthen market optimism, while a more cautious or hawkish tone might restrain gains. The entire financial sector is watching closely as cryptocurrencies become more intertwined with traditional markets, and macroeconomic factors exert a growing influence on price dynamics.