Fed Rate Cuts Boost Crypto: Bitcoin Rises Amid Mixed Signals

The Federal Reserve’s monetary policy decisions from September to December 2025 followed a predictable script, with three strategic cuts lowering the target interest rate by a cumulative 0.75%. The first reduction on September 17 brought the range to 4.00%–4.25%, followed by subsequent cuts in October and December. According to CoinEx chief analyst Jeff Ko, much of this action was already priced into markets, and the central bank’s updated ‘dot plot’ projections leaned slightly more hawkish than some traders had hoped, tempering immediate bullish enthusiasm.

Ko highlighted the Fed’s accompanying $40 billion in short-term Treasury purchases as a technical measure designed to ease liquidity pressures and lower short-term rates, explicitly distinguishing it from a broad stimulus program. This nuanced approach led markets to interpret the overall package as mildly positive. The reaction in traditional finance, notably a rise in U.S. stocks, provided a crucial tailwind that helped Bitcoin stabilize after an early dip, illustrating the continued, if uneven, correlation between crypto and broader risk assets.

Data from on-chain analytics firm Santiment reveals a classic short-term trading pattern unfolding around each Fed announcement. According to their reports, each rate cut triggered a ‘buy the rumor, sell the news’ reaction, where initial optimism was quickly followed by a wave of short selling and profit-taking. This dynamic explains the choppy and mixed market responses observed, with brief pullbacks following the ostensibly bullish news.

Santiment adds a crucial behavioral insight: a small wave of fear, uncertainty, and doubt (FUD) or retail selling often signals that the mild post-cut downswing is concluding. Historically, once this selling pressure subsides and sentiment calms, a bounce has tended to follow. This pattern underscores that while rate cuts are viewed as structurally bullish for crypto over the long term, their immediate impact is often counterintuitive, dominated by tactical trading flows rather than fundamental reassessment.

Bitcoin’s price action reflected this volatility, dipping below $90,000 before rallying to approximately $93,500 on Coinbase and subsequently settling near $92,300. Technically, BTC remains confined within a small rising channel that sits inside a larger, overarching downtrend, presenting a complex picture for traders. A key technical development noted by analysts is the Moving Average Convergence Divergence (MACD) histogram approaching a positive crossover, a signal some interpret as a precursor to renewed upward momentum.

However, significant overhead resistance looms between $97,000 and $108,000, a zone that must be convincingly breached to signal a stronger bullish trend. Supporting fundamentals show some weakness, as ETF activity has been notably tepid, with net inflows of only $219 million recorded since late November. This lack of robust institutional demand has kept many investors in a cautious stance, waiting for clearer signals of sustained buying pressure.

The crypto market’s modest lift occurred against a supportive macro backdrop characterized by U.S. dollar weakness. The U.S. Dollar Index (DXY) fell to 98.36, and its own MACD indicator showed bearish momentum, making dollar-denominated assets like Bitcoin relatively more attractive. Concurrently, the Nasdaq Composite’s rebound above its 50-, 100-, and 200-day simple moving averages provided a general lift to risk assets, which buoyed Bitcoin’s recovery attempts.

Yet, the relationship between equities and crypto remains fraught with asymmetry. As observed in recent movements, losses in the stock market tend to impact Bitcoin more severely than equivalent gains provide support. This creates a skewed risk profile for traders, where crypto remains vulnerable to sudden downturns in traditional risk sentiment, even as it benefits from rallies. This dynamic, combined with the technical and flow-based headwinds, suggests that while the Fed’s rate cuts have provided a floor, the path to a sustained crypto bull market remains contingent on clearer technical breakouts and stronger fundamental inflows.