"Fed's Move to Lower Rates Sets Crypto at a Crossroads: Bulls Eye Gains While Bubbles Loom"

On September 17, 2025, the U.S. Federal Reserve reduced interest rates by a quarter point, sparking immediate fluctuations in the cryptocurrency sector.

temporarily dipped below $115,000 after the news broke. The adjustment lowered the federal funds rate from 4.00%–4.25% to 3.75%–4.00%—the first rate reduction in the current cycle and an event that markets had largely anticipated. Despite this, the combination of the Fed’s monetary policy and the broader economic setting brought fresh uncertainty for crypto holders, with technical signals and previous price trends offering clues about future market moves.

Prior to the Fed’s move, Bitcoin’s price was shaped by a cup-and-handle pattern, with resistance near $116,000. This formation, which developed as Bitcoin rebounded from $105,000 to $116,900, suggested a possible upward break toward $126,700 if the pattern held true. Analysts cautioned that similar setups near all-time highs had led to failed breakouts before, urging vigilance. The $113,500 support area—strengthened by important moving averages—was seen as vital for preserving a bullish outlook. A fall below this could open the door to a deeper decline, targeting $105,300. Resistance at $116,000, $118,000, and $120,000 was being closely tracked, with each level potentially paving the way for further gains.

The Fed’s rate cut’s influence on digital assets is closely tied to wider macro trends. Lower rates generally ease borrowing and inject more liquidity, which can prompt investors to seek higher yields in riskier assets like cryptocurrencies. In such scenarios, Bitcoin and its peers often rally, as lower yields in traditional markets make crypto more attractive. Past rate-cutting cycles—such as the central bank’s actions during the 2020 pandemic—saw Bitcoin climb from $7,000 to over $28,000. Still, lower rates can also fuel speculative bubbles, especially in volatile markets like crypto. The 2021 bull market, propelled by easy money and low rates, ended with a sharp downturn, underscoring the dangers of unsustainable rallies and subsequent corrections.

Data from derivatives markets highlighted the heightened risks of sharp price swings and possible liquidations across the crypto landscape. Bitcoin futures open interest surpassed $19.5 billion, with substantial leveraged bets on both sides of the market. Should Bitcoin drop to $104,500 or surpass $124,000, forced liquidations for long or short positions could exceed $10 billion and $5.5 billion, respectively. This reflects the heavy use of leverage among traders and the increased sensitivity to macro events like the Fed’s policy decisions. Major alternative coins mirrored this trend, as

, , and also faced significant liquidation risks depending on market direction.

The broader consequences of the Fed’s move were visible throughout the economic landscape. With inflation remaining over target levels and unemployment close to 4.3%, the rate cut signaled a careful balance between encouraging growth and containing price pressures. Experts pointed out that while the cut might support risk assets, ongoing stagflation concerns—where high inflation meets sluggish growth—added another layer of uncertainty for crypto investors. Additionally, the September triple witching in equities and upcoming SEC rulings on crypto ETFs were set to inject further volatility, potentially affecting the paths of Bitcoin and other digital assets in the near term.

In the days ahead, market participants’ attention was fixed on the Federal Reserve’s messaging during Powell’s post-meeting statements. Both traders and analysts highlighted that the Fed’s guidance, rather than the specific size of the cut, would be key in shaping market mood. A dovish tone suggesting more rate reductions could fuel bullish sentiment, while a more cautious or hawkish approach might lead to profit-taking or even declines. This dynamic underscored the role of macroeconomic factors in crypto investment strategies, with institutional players often shifting capital in line with broader market trends. Consequently, the period following the Fed’s announcement remained crucial for both technical analysis and big-picture assessments.