The US Federal Reserve (Fed) cut its benchmark rate by 25 basis points (bps) to 3.5% - 3.75% on December 10, 2025, The third cut this year.
What This Means for Crypto:
Risk On Assets: Lower interest rates are generally supportive of risk assets, including crypto. However, Chair Powell’s forward guidance was mixed, cooling hopes for an immediate, aggressive Bitcoin (BTC) breakout.
Liquidity: The Fed's cautious easing approach, with a signal for potentially only one more cut in 2026, suggests the meaningful liquidity injection the crypto market craves may be delayed until the new year.
Inflation Hedge Thesis: Inflation remains "somewhat elevated" above the Fed's 2% target. Some analysts are questioning BTC’s reputation as a pure inflation hedge, noting its high correlation with technology stocks and sensitivity to broader liquidity conditions in 2025.
BTC Price Action: BTC showed limited movement following the announcement, reflecting a lack of strong, immediate macro catalysts.
Outlook: Crypto markets are waiting for clearer monetary policy signals and a shift in the Fed's dual focus away from stubborn inflation and toward the softening labor market.
