The US central bank cut interest rates by 0.25 percentage points, a move fully priced in by financial markets — including the crypto sector. Yet Bitcoin and Ethereum reacted in an unexpected way, failing to extend the positive momentum that had built ahead of the announcement.

The Federal Reserve (via the Federal Open Market Committee, FOMC) reduced rates to a three-year low, citing mounting concerns about a weakening labor market despite persistent inflation. The benchmark federal funds rate now stands between 3.5% and 3.75%, marking the third consecutive quarter-point cut and aligning with market expectations.

Policymakers noted that unemployment had “edged up through September” and highlighted “downside risks” to the labor market. Fresh economic projections additionally signal a steeper decline in inflation next year than earlier forecast.

But the vote was far from unanimous. Only nine of twelve rate-setters supported the cut — two favored keeping rates unchanged, and one pushed for a half-point cut, marking the highest level of dissent since 2019.

Crypto priced in the decision

Although the decision matched expectations across the financial sector, the behavior of the crypto market may have seemed surprising at first glance.

Both Bitcoin and Ethereum began rising hours before Fed Chair Jerome Powell presented the FOMC verdict. Under normal circumstances, a rate cut tends to support further growth of major crypto assets — but this time, the opposite happened.

Most of the pre-announcement gains faded. At the time of writing, Bitcoin was trading near the same level as a week ago (between $92,000 and $92,500), and Ethereum hovered just below $3,400, roughly aligning with levels from previous weeks.

This reaction is, however, quite logical: markets had already priced in the expected rate cut. Because the Fed acted exactly as anticipated, no new bullish impulse emerged.

A deeper cut — for instance by half a percentage point — could have triggered a broader rally across crypto assets. Conversely, a rate hold or increase would likely have caused a sharp downturn.

In the end, the absence of surprises is itself good news. The Fed also sent a signal about what may come in 2026. The first FOMC meeting of the new year is scheduled for late January — and a lot may change before then.

Sources:

https://www.federalreserve.gov/newsevents/pressreleases/monetary20251210a.htm

https://www.ft.com/content/7a30a8ca-ba43-46d3-bbb9-796610a13d8b

https://finance.yahoo.com/news/bitcoin-ethereum-xrp-dive-rate-174120460.html

https://www.federalreserve.gov/monetarypolicy/fomccalendars.htm#42828