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The US Federal Reserve lowered the federal funds rate by 25 basis points on October 29, bringing the new range to 3.75%–4.00%. Officials cited easing inflation, softer labor conditions, and increased downside risks to growth.
The decision also came with a plan to end balance-sheet runoff on December 1, shifting to full reinvestment of maturing Treasuries while continuing to cap MBS purchases.
Markets adjusted quickly. Chair Jerome Powell said another cut in December is “not guaranteed,” pointing to internal divisions and limited data visibility. That message tempered bets on a year-end move.
Nomura revised its call after the meeting. The bank now expects the Fed to hold in December, after previously projecting another 25 bps reduction. Its base case points to modestly dovish data that may not justify immediate easing.
Digital-asset markets reacted to the macroeconomic shift. Bitcoin held steady at important levels, with exchange-traded products experiencing high demand in October. Crypto ETFs drew approximately $6 billion in total this month, primarily from US offerings, which was aided by a rise in risk appetite.
In addition, sentiment indicators remain cautious. The Crypto Fear & Greed Index stays in “fear” mode, indicating traders still lack full confidence in a bullish trend despite supportive policies.
Price forecasts are once again a focus. Michael Saylor of MicroStrategy mentioned this week that Bitcoin might reach approximately $150,000 by late 2025, driven by institutional adoption, product development, and better liquidity.
His remarks echoed a broader narrative that a softer policy backdrop and persistent ETF inflows can underpin higher prices over the next year.
The policy mix now combines a lower policy rate and an end to quantitative tightening. That combination eases financial conditions and supports risk assets at the margin, even as officials avoid pre-committing to a December move. If labor data stabilizes and inflation persists, the Fed will have the opportunity to act in 2026. Otherwise, policymakers might pause to maintain credibility.
For crypto, funding conditions are crucial. Cheaper dollar funding and stable liquidity help maintain ETF demand and lessen volatility spikes. Nonetheless, sentiment remains delicate, and macro surprises can quickly tighten conditions. Investors now closely monitor employment, inflation, and ETF flow data to determine if the environment favors a gradual upward trend or further consolidation into the year-end.
Also Read: Stock Market Update: Nifty 50, Sensex Set to Open Lower After US Fed Rate Cut
