With the Fed announcing its eagerly awaited decision, analysts are now focusing on the accompanying tone.
Summary
- The Federal Reserve has lowered interest rates by 25 basis points, as anticipated by the markets.
- The Fed’s tone is dove-like, which may benefit Bitcoin and altcoins.
- However, altcoins still face challenges, as there are no clear indications regarding further easing.
The Federal Reserve has implemented its long-expected 25-basis-point rate reduction, marking the first cut of 2025. While markets had fully anticipated the September 17 cut, the focal point was the Fed’s tone and its implications for the future.
Importantly, Fed Chair Jerome Powell highlighted concerns regarding employment and growth, noting that further cuts remain a possibility. This, combined with a dissenter from the FOMC advocating for a 50-basis-point cut, indicates a dovish shift. Crypto.news consulted several experts in the cryptocurrency field prior to the decision, inquiring about potential impacts on crypto markets.
A 25-basis-point reduction was anticipated, but the implications are greater than before, states Shawn Young, chief analyst at cryptocurrency exchange MEXC. With inflation still high, markets will be closely monitoring the Fed’s trajectory.
“In a positive scenario, a dovish Fed outlook with increased expectations of rate cuts could lead to more investments in BTC and other top coins, driving the BTC price towards the $120,000–$125,000 range in the coming weeks.”
Farzam Ehsani, CEO of crypto exchange VALR, mentioned that Bitcoin might still be pressured by macroeconomic factors. The critical element for Bitcoin, he remarked, is the growth of institutional liquidity.
“Bitcoin’s relative underperformance compared to Gold and the S&P 500 indicates the current shift in market dynamics… investors are increasingly selective about their capital allocations.”
Fed’s decision could prompt altcoin rotation
As noted by Arthur Azizov, founder of B2 Ventures, the market’s reaction to the Fed could either boost Bitcoin and altcoins or lead to a “sell the news” situation. The latter is notably probable if the markets perceive the Fed’s decision as insufficiently dovish.
“Altcoins are notably more sensitive. Solana, currently over $230, shows strength but encounters significant resistance around $240-250, while XRP is holding the $2.90-$3.00 level. The challenge lies in liquidity: without new inflows, traders tend to revert to Bitcoin during uncertain times,” according to Arthur Azizov, B2 Ventures.
