Bitcoin, crypto market remain neutral despite Federal Reserve cutting rates by 25bps

Bitcoin (BTC) and a majority of top tokens in the cryptocurrency market held steady on Wednesday, despite the Federal Reserve's (Fed) decision to lower interest rates by 25 basis points (bps), according to market expectations.

Crypto market stays muted amid Fed's decision to lower rates

The Federal Open Market Committee (FOMC) on Wednesday announced that it will lower interest rates by 25 basis points, meeting market expectations.

A majority of committee members also anticipate two additional cuts before the end of the year due to concerns over the labor market. This marks the Fed's first rate cut in 2025, a decision that has built anticipation over the past few weeks.

Governor Stephen Miran, who was sworn in this week as a member of the Reserve's Board of Governors, was the only official to vote for a 50 bps cut. Six officials voted for no additional cuts, while nine voted for two more quarter percentage point cuts this year.

"Recent indicators suggest that growth of economic activity moderated in the first half of the year," the US Federal Reserve said in a statement on Wednesday. "Job gains have slowed, and the unemployment rate has edged up but remains low. Inflation has moved up and remains somewhat elevated."

The move follows US President Donald Trump's repeated push for rate cuts, including threats to fire Fed Chair Jerome Powell.

Lower rates often reduce the appeal of traditional yield-bearing assets, such as government bonds, prompting investors to seek alternatives with higher returns, like stocks and potentially crypto.

The Fed's decision had little impact on the crypto market, with Bitcoin trading at $116,000 at the time of publication, despite rising above $117,000 ahead of the FOMC meeting. Altcoins also showed a slight positive reaction to the decision, with Ethereum (ETH), XRP, BNB, and Solana (SOL) experiencing gains of just over 2%.

The largely muted reaction suggests that investors have largely priced in the cut.

BTC's slow response mirrored the S&P 500 (SPX), which also edged lower after the Fed's rate decision. The bank noted that 50% of the time, in the first month after a rate cut, the S&P 500 has historically ended the month with losses.

However, it added that the SPX historically posts gains of 15% one year after the Fed lowers rates when it's close to its all-time high. This could impact Bitcoin, which has shown a rising positive correlation with the index in the past few years.