The U.S. Federal Reserve cut its benchmark interest rate by 25 basis points on Sept. 17, lowering the federal funds rate to a new range of 4.00% to 4.25%— its first reduction in nine months.
The move, backed by 11 of 12 voting members, came amid weaker labor market data, slower consumer spending, and an uptick in unemployment.
Markets had fully priced in the cut. Prediction markets on Polymarket showed a 93% probability ahead of the decision, leaving little surprise for traders.
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Fed rate cut signals caution, not confidence
Fed Chair Jerome Powell's remarks during the post-decision press conference rattled investors with a cautious tone.
"Inflation has risen recently and remains somewhat elevated," Powell said, noting that the moderation in GDP growth largely reflects a slowdown in consumer spending. He added that job gains are "running below the breakeven rate," with payroll growth slipping to around 29,000 per month and unemployment edging up to 4.3%.
On tariffs, Powell struck a note of uncertainty:
"The overall effect of tariffs on inflation remains to be seen," he said, signaling that new trade restrictions could complicate the Fed's path to its 2% inflation target.
Fed rate cut sends crypto stocks tanking
Following the announcement, crypto-adjacent equities traded mixed .
Coinbase (COIN) fell 2.20%, MicroStrategy (MSTR) dropped 0.86%, and Robinhood (HOOD) eased 0.37%. Payment firms split, with PayPal (PYPL) up 1.62% and Block (SQ) adding 0.32%, while Circle (CRCL) slid 1.67%.
Mining names also weakened, with Marathon Digital (MARA) down 1.02% and Iris Energy (IREN) off 0.44%. By contrast, Galaxy Digital (GLXY) gained 1.89% and Mercurity Fintech (MFH) surged 4.51%.
Lesser-known Bitcoin treasury stocks rallied sharply. Prenetics (PRE) jumped 14.86%, Convano (TSE) rose 8.47%, and Bullish Global (BLSH) gained 5.32%, suggesting investors are rotating into smaller-cap plays.
Fed rate cut fails to boost Bitcoin and XRP
Major cryptocurrencies showed little momentum after the announcement. Bitcoin traded flat below $116,000, while XRP drifted to $3.02. Analysts said the lackluster response reflected how markets had already priced in a 25 bps reduction.
Ira Auerbach, former Head of Digital Assets at Nasdaq and now Head of Tandem at Offchain Labs, tells TheStreet Roundtable that the Fed's move offers support but not a fundamental shift for crypto:
"A Fed cut is a tailwind, not a paradigm shift in the market," Auerbach said. "A lower discount rate typically lifts the multiple on scarce, growth-sensitive assets, Bitcoin and ETH included, while trimming the opportunity cost of holding those assets versus cash. One cut won't set the trend, but the direction of travel favors crypto."
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Fed rate cut met with skepticism from veteran trader
Yet some analysts warned against over-optimism. A pseudonymous trader known as IronLedgertold TheStreet Roundtable the market risks treating the cut as more than it is:
"Cuts are sugar highs. They don't fix structural problems in liquidity or regulation. Retail is still sidelined, institutions are still cautious, and one 25 bps tweak doesn't erase two years of tightening. If crypto rallies on this, it'll be short-lived. In simpler words, rate cuts are no panacea for crypto."
Fed rate cut outlook: more to come?
The Fed's projections show the median federal funds rate falling to 3.6% in 2025 and 3.4% in 2026, signaling more cuts ahead if economic softness persists. But Powell warned that risks of weak labor markets can drag inflation down.
This story was originally reported by TheStreet on Sep 17, 2025, where it first appeared in the MARKETS section. Add TheStreet as a Preferred Source by clicking here.
