Key Points
- •Federal Reserve plans a 25 basis points rate cut amid government shutdown.
- •Market impact anticipated on risk assets such as BTC and ETH.
- •Uncertainty remains about a potential December rate change.
On October 29, the Federal Reserve is anticipated to decrease key interest rates by 25 basis points amid a government shutdown and lack of official economic data.
This decision could stimulate the U.S. economy, benefiting cryptocurrencies like Bitcoin and Ethereum by lowering opportunity costs and enhancing liquidity amidst macroeconomic uncertainties.
Fed's Interest Rate Strategy Amidst Shutdown
The Federal Reserve's expected 25 basis points interest rate reduction comes amid unprecedented uncertainty, marked by a government shutdown. Economists consider it an "insurance measure" against employment decline while balancing ongoing inflation challenges, highlighted by industry experts.
Market shifts are anticipated with the interest cut, possibly boosting liquidity and supporting risk assets like BTC and ETH. Traders eye potential benefits for the labor market, considering historical patterns of rate cuts that favored cryptocurrency sentiment.
Economists, including Loretta Mester and Gregory Daco, emphasize the importance of balancing inflation and employment. Mester notes, "There’s definitely some weakening on the employment side of the mandate...But it’s important that they not lose sight of the inflation part of the mandate. The inflation risks, I believe, remain to the upside." Daco notes potential division among Fed policymakers regarding further easing in December, highlighting uncertainty in monetary policy direction.
Historical Patterns Favor Cryptocurrencies Post-Rate Cuts
Did you know? Quarter-point rate cuts during macroeconomic stress periods have historically caused surges in cryptocurrency assets, including BTC and ETH, emphasizing economic cycle impacts on market sentiment.
Bitcoin, trading at $113,568.48, reflects a market cap of $2.26 trillion with a 59.30% dominance. Recent price shifts, a subtle -0.56% over 24 hours but climbing 4.87% in seven days, reveal volatility amidst broader market developments. Data source: CoinMarketCap, last updated October 29, 2025.
Coincu's research team suggests that while regulation and policy adjustments could evolve, historical responses indicate a positive sentiment for macro hedges like Layer 1 assets aligning with risk appetite shifts during easing phases.