Fed’s Jerome Powell’s Message Creates Ripple Effect on Crypto Market

On Wednesday, the Federal Reserve announced its decision to lower interest rates by 50 basis points, marking its first cut since March 2020 and signaling a shift in monetary policy.

Fed Chair Jerome Powell explained at a press conference that initiating a substantial reduction while the U.S. economy remains robust aims to minimize the risk of an economic downturn. He emphasized the Fed’s intent to restore price stability without triggering significant unemployment, a challenge often associated with inflationary pressures. "Today’s action reflects our strong commitment to achieving that goal," Powell stated.

However, Powell was cautious about committing to a similar pace of rate cuts in the future, indicating that upcoming decisions would depend on economic performance in the months ahead. "I do not think anyone should look at this and say, ‘Oh, this is the new pace.’ The economy can develop in a way that might lead us to either accelerate or slow down," he noted.

Crypto Market Reaction

The cryptocurrency market reacted positively to the Fed’s announcement, with Bitcoin rising to a three-week high. At the time of reporting, Bitcoin had increased by 4.31% in the last 24 hours, reaching $62,336, and was up 8% for the week. Other cryptocurrencies such as Ethereum, Solana, Cardano, and Shiba Inu saw gains between 5% to 8% in the same timeframe. Some altcoins, including SUI, TAO, and others, experienced even higher increases, ranging from 10% to 24%.

Investors are now anticipating an additional 70 basis points of rate cuts during the Fed’s upcoming meetings in November and December, suggesting a more aggressive stance than indicated by policymakers. Nonetheless, Fed Chair Jerome Powell reiterated that future rate cuts would be guided by economic data.

Despite Powell’s measured approach, the crypto market has largely overlooked these nuances, with several cryptocurrencies continuing to build on their recent gains.