Cryptocurrency markets showed a modest rebound following the US Federal Reserve’s widely anticipated interest rate cut on Wednesday, with some analysts suggesting a stronger recovery could still develop. The central bank has now delivered three consecutive rate cuts totaling 0.75% between September and December.

While lower rates are generally viewed as supportive for crypto over the longer term, each cut has been followed by short-term selling pressure. Onchain analytics firm Santiment described this as a classic “buy the rumor, sell the news” reaction. Even so, the firm noted that there is “typically a bounce after the dust settles,” which can create relatively predictable market behavior.

“Thus far, this latest rate cut has been no different. Look for a slight level of FUD or retail sell-off to indicate that the mild post-cut downswing has ended.” Lower borrowing costs and easier financial conditions have historically encouraged greater risk-taking, often benefiting speculative assets such as cryptocurrencies.

Rate cuts priced in, but tone matters

According to CoinEx chief analyst Jeff Ko, the latest rate cut was “widely expected and pretty much priced in.” However, he pointed out that the Federal Reserve’s updated dot plot, which reflects policymakers’ outlook for future rates, leaned slightly hawkish.

Ko added that the Fed’s $40 billion in short-term Treasury purchases represented a technical step to manage system liquidity and reduce short-term rates, rather than a broad stimulus effort. Even so, markets appeared to interpret the move as mildly positive, with US equities rising and Bitcoin rebounding alongside broader risk sentiment.

Signs of a maturing Bitcoin market

Taking a longer-term view, Fidelity Investments’ director of global macro, Jurrien Timmer, observed that Bitcoin has underperformed equity markets this year but argued that the asset class is showing signs of maturity compared with earlier cycles.

“It’s hard to tell in real time whether a new [crypto] winter is upon us, but looking at the evolving wave structure of Bitcoin’s maturing network curve, we can see that the most recent bull market looks pretty mature.”

Crypto prices edged higher during Friday’s morning session, with Bitcoin recovering from a post-cut dip below $90,000 to briefly reach the $93,500 mark. That level once again acted as resistance, pushing the price back toward $92,300, where it was trading at the time of writing.

Sources:

https://cointelegraph.com/news/crypto-markets-bounce-fed-rate-cut-analysts-predict-bigger-rally-ahead

https://x.com/TimmerFidelity/status/1999147162425536948

https://x.com/santimentfeed/status/1999164907653145069