The post Why Is Crypto Down Today After the Fed’s 25 Bps Rate Cut? appeared first on Coinpedia Fintech News
The crypto market dropped slightly after the Fed rate cut on Wednesday, September 17. As expected, the Federal Reserve initiated its first rate cut of 2025 by slashing its benchmark interest rate by 25 bps to 4% and 4.25%. Additionally, the Fed signaled a 50 bps rate cut before the end of this year, supported by the majority of the commissioners.
However, the crypto market cap dropped 1% to hover about $4.1 trillion during the mid-North American session. Bitcoin (BTC) price slipped 1% to hit a range low of about $114,940 before rebounding slightly to trade around $115,698 at the time of this reporting.
The crypto market was bound to experience a sell-the-news narrative following the Fed rate cut especially after the majority of traders predicted the outcome correctly. Traders who had been buying the rumors have accelerated profit-taking on the news today.
While the Fed initiated its first rate cut of 2025, the commissioners voted to continue with Quantitative Tightening (QT). The Fed has been shrinking its balance sheet by selling government bonds.
“The Committee will continue reducing its holdings of Treasury securities and agency debt and agency mortgage‑backed securities,” the Fed noted.
As a result, the Fed will continue to pull liquidity from the financial system, thus weighing down on the crypto bullish outlook.
Bitcoin and Ethereum had led the wider crypto market in a bullish outlook during the past few weeks but the momentum has gradually faded. For instance, Solana price has struggled to rally beyond $250, XRP price has failed to rally above $3.2, and Ethereum price has experienced a significant supply wall around $4,777.
Also read: XRP Price Prediction: XRP ETF Set to Launch This Week – $100 Breakout Finally Coming?
