Fed Slashes Rates by 25 bps as Crypto Bulls Eye New Highs

October 29, 2025 — The Fed delivered a 25 bps cut, placing the funds rate at 3.75%–4.00%. Chair Jerome Powell noted cooling inflation and softening labor indicators while reminding markets that policy remains data dependent. The partial government shutdown limits fresh readings, yet the Fed leaned into easing as core PCE ~3% trends toward target and unemployment ~4.3% holds steady.

Powell’s cautious cut ignites market optimism

October 29, 2025 — The Fed delivered a 25 bps cut, placing the funds rate at 3.75%–4.00%. Chair Jerome Powell noted cooling inflation and softening labor indicators while reminding markets that policy remains data dependent. The partial government shutdown limits fresh readings, yet the Fed leaned into easing as core PCE ~3% trends toward target and unemployment ~4.3% holds steady.

Risk assets cheered. The S&P 500 added 0.36% to a new high, led by megacap tech. Bitcoin ripped 2.5% to ~$115,800 within hours as traders rotated from low-yield cash to high-beta exposure.

Crypto’s liquidity lifeline gathers pace

Lower rates cut funding costs and lift risk tolerance. The move arrives as spot BTC ETFs post $202M net inflows on Oct 28 and a $3.55B weekly haul earlier this month that helped send BTC to ATHs above $126K. Flows and rate relief often travel together. Historically, each easing phase since 2020 coincided with powerful crypto rallies.

Desk chatter now targets $120K–$130K into year-end. Stablecoin supply near $180B signals dry powder. Ethereum holds around $4,000 despite light ETF outflows, and compressed DeFi yields should redirect capital toward spot and perps as real rates drift below 1%. The cut also loosens collateral haircuts and broadens borrowing capacity for market-makers, which supports depth on majors and top alts.

Dot plot paves the way for deeper cuts

The new projections point to two additional 25 bps cuts by December, implying a 3.6% median policy rate for 2025, ~1.6% GDP growth, and ~4.5% unemployment. Powell acknowledged shutdown-driven data gaps yet flagged scope to act if Q4 GDP underwhelms or labor softens.

Play the history. Since 2020, every 50 bps of net cuts correlated with roughly 40–60% BTC gains over three months as liquidity and risk appetite improved. Add ETF accessibility and rising global liquidity, and the path of least resistance remains higher. Houses like Standard Chartered keep $130K year-end targets in play, while some desks map $150K into mid-2026 if the Fed delivers on the path the dot plot sketches.