- The U.S. Federal Reserve made its first 2025 interest rate cut of 25 basis points on September 17.
- Economist Timothy Peterson believes markets are underestimating the chance of more rapid rate cuts in the coming months.
- Market data suggests a strong likelihood of another 25 basis point cut at the October 29 Fed meeting.
- Bitcoin’s price briefly jumped near $117,000 before retracing to previous levels after the rate cut announcement.
- Fed officials expect two more quarter-point rate cuts this year, but emphasize that policy remains data-dependent.
The U.S. Federal Reserve reduced its key interest rate by 25 basis points on September 17, marking the first cut of 2025. The decision was broadly anticipated by market participants, who largely expected a quarter-point reduction.
According to Timothy Peterson, an economist quoted by Cointelegraph, markets might be underestimating the possibility of swift policy changes by the Fed. “Markets are underpricing the likelihood of rapid rate cuts in the coming months on the part of the Federal Reserve,” Peterson said. He added that “there has never been a gradual reduction in rates like that currently envisioned by the Fed.” Peterson expects that a surprise effect could occur, potentially causing a significant price move in cryptocurrencies such as Bitcoin and other alternative coins.
Market data from the CME FedWatch Tool indicated a 96% chance of the 25 basis point cut before the Fed’s September meeting and shows a 91.9% probability of another similar cut at the next scheduled meeting on October 29. Just 8.1% of market estimates predict rates will remain unchanged.
Bitcoin (BTC) experienced a price spike to almost $117,000 shortly before the Fed’s announcement but later returned to roughly $115,570, according to CoinMarketCap. Over the past 30 days, Bitcoin posted a 1.03% increase.
Some financial institutions were divided on the size of the recent cut. While Standard Chartered expected a 50 basis point reduction, Goldman Sachs CEO David Solomon anticipated the 25 basis point move.
Fed officials have stated they expect two further quarter-point cuts in 2025. However, Fed Chair Jerome Powell noted, “We’re not on a pre-set path.” Lower interest rates typically make assets like bonds and term deposits less attractive, which can support higher prices for risk-based assets like cryptocurrencies.
Additional Fed commentary did not indicate a set timeline for future rate moves, emphasizing ongoing evaluation of new economic data.
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