Fed Rate Reduction Puts Crypto at a Turning Point: Both Bulls and Bears Await Outcomes

Following the U.S. Federal Reserve’s decision to lower interest rates by a quarter point on September 17, 2025, Bitcoin dipped below $115,000. The widely expected move adjusted the target range from 4.00%–4.25% down to 3.75%–4.00%. Although the Fed's policy shift was intended to loosen financial conditions and weaken the dollar, Bitcoin’s price response was mixed, reflecting prevailing market uncertainties. Initially, this policy shift led BTC to rebound slightly, but the price soon stabilized around $116,000 before slipping lower.

Traders kept a close eye on Bitcoin’s action near important support at $113,500, a zone also highlighted by the 20-day and 50-day exponential moving averages. This level became a key battleground for bullish traders. Analysts suggested that a drop below $113,500 might have triggered a deeper decline toward $111,100 or even $105,300. Conversely, a decisive move above the $116,000 resistance could have propelled Bitcoin toward $120,000 or higher, depending on wider economic factors. The relative strength index (RSI) indicated that

was not yet in overbought territory, implying there was still potential for further upward movement if momentum persisted. Still, experts warned that, unless trading volume and volatility picked up, the consolidation could result in misleading breakouts.

The derivatives market was especially sensitive to the Fed’s announcement. Data from Coinglass showed open interest in Bitcoin futures and perpetual swaps had surpassed $220 billion, reflecting significant market exposure and the risk of large-scale liquidations. Traders had adopted both aggressive long and short stances, with high leverage increasing the likelihood of forced liquidations during steep price changes. Analysts pointed out that a drop to $104,500 could result in more than $10 billion in losses for long positions, while a surge to $124,000 might trigger over $5.5 billion in short liquidations. The altcoin sector was similarly affected, with assets like

and also facing considerable liquidation threats as traders repositioned ahead of the Fed’s policy change.

The rate cut also brought to light the conflicting perspectives among market players. Optimists argued that looser monetary policy would inject more liquidity and boost risk appetite, benefiting Bitcoin as a potential shield against a weakening U.S. dollar. On the other hand, pessimists raised concerns about stagflation, especially if the rate cuts pointed to deeper economic troubles. These debates were intensified by a triple witching event in equities, a period often linked to spikes in volatility. The ongoing discussion about the actual impact of the Fed’s move highlighted the uncertain outlook for Bitcoin as investors weighed both technical indicators and broader macroeconomic signals.

Looking forward, attention turned to Federal Reserve Chair Jerome Powell’s press briefing, where his remarks on inflation, employment, and future policy directions were expected to influence market sentiment. Should Powell deliver a dovish message and suggest further rate reductions, it could spark increased risk-taking and help Bitcoin rebound. Conversely, even a subtle indication toward policy tightening might result in a swift downturn. Experts advised traders to stay prudent, recommending strict stop-loss strategies and reduced leverage to help manage risk amid heightened volatility. The next several weeks would be pivotal in determining whether Bitcoin could maintain support above $113,500 and resume its climb, or if a further correction was in store.

The broader crypto market also faced increased uncertainty in light of these developments. While Bitcoin has often led rallies during risk-on periods, smaller altcoins tend to be more volatile and react quickly to shifts in sentiment. The combination of the Fed’s decision, new regulatory actions, and macroeconomic updates would be critical in shaping the short- and mid-term prospects for the cryptocurrency sector. As both investors and traders navigated these changes, their ability to adapt strategies to the evolving climate would be crucial for risk management and seizing possible opportunities.