In brief
- The Federal Reserve cut its benchmark rate by 0.25% on Wednesday, causing Bitcoin to dip 1.4% to around $92,000 while Ethereum rose slightly.
- The Fed did not commit to future rate cuts and will resume buying short-term Treasury bills to maintain reserve levels.
- Immediately after the news was announced Wednesday, traders rate that there’s only a 22% chance of another rate cut in January.
The price of Bitcoin and Ethereum wavered Wednesday after the Federal Reserve lowered its benchmark rate by 0.25%, while the regulator said it would resume its purchase of Treasury bills.
Bitcoin changed hands around $92,000 following the Fed’s decision, down 1.4% over the past day, according to crypto price aggregator CoinGecko. Ethereum had gained 0.6% in the past day to trade just above $3,300, while Solana had dropped 3.2% since yesterday.
In its post-meeting statement, the Fed did not necessarily signal that there would be more cuts in the new year, adding it would “carefully assess incoming data, the evolving outlook, and the balance of risks.”
But the FOMC did say it will resume buying short-term Treasury bills.
“The Committee judges that reserve balances have declined to ample levels and will initiate purchases of shorter-term Treasury securities as needed to maintain an ample supply of reserves on an ongoing basis,” the Federal Open Market Committee said in its press release.
In updated economic and rate projections, traders have penciled in a 22% chance that the rate will be lowered again in January, according to the CME FedWatch Tool. But it’s worth noting that Wednesday’s decision wasn’t unanimous, with two members of the FOMC voting to keep rates unchanged.
“It’s not surprising that the U.S. central bank didn’t commit to lower borrowing costs in the months ahead, considering its ‘concern regarding a softening labor market and still-sticky inflation,’” Sygnum Bank CIO Fabian Dori said in a statement shared with Decrypt.
Considering that November’s consumer-price index report was delayed until December 18, and last month’s hiring data has yet to be released, Wednesday’s decision was reached without some government data, due to the shutdown that ended last month.
Meanwhile, the ADP National Employment Report indicated last week that employers shed 32,000 jobs last month. Job creation in the second half of 2025 has been flat, the report added, with November marking a particularly weak month for manufacturing.
The central bank is effectively walking a tightrope: Cutting interest rates too quickly could bolster price pressures stemming from tariffs, while adjusting rates too slowly risks a prolonged downturn in the labor market that contributes to a recession.
Still, the Fed’s latest cut was widely expected. Ahead of the meeting, traders penciled in an 89% chance that the Fed would cut interest rates by a quarter of a percentage point for a third consecutive meeting, according to CME FedWatch.
Wednesday’s decision came as President Donald Trump mulls the U.S. Central Bank’s next chair. National Economic Council Director Kevin Hassett is widely viewed as the frontrunner, but interviews with candidates are just starting to begin, per Yahoo Finance.
In an interview with Politico that was released on Tuesday, the president signaled that a candidate’s willingness to immediately cut interest rates served as a litmus test. After exercising caution in lowering borrowing costs, Fed Chair Jerome Powell’s term will expire in May.
“A decisively pro-crypto Fed Chair could accelerate blockchain’s integration into the banking system,” analysts at investment bank Compass Point wrote in a recent note, pointing to National Economic Council’s 168-page report under Hassett on digital asset regulation.
On Myriad, traders penciled in a 73% chance on Wednesday that Hassett is nominated as Powell’s replacement before March. (Disclaimer: Myriad is a unit of Dastan, the parent company of an editorially independent Decrypt.)
Trump has pressured Powell to cut interest rates for most of his second term, but the central bank only delivered its first cut of the year in September, after determining a year ago that taming inflation could be more difficult due to shifts in trade and immigration. Another cut followed in October.
On Tuesday, Trump reiterated his frustration with Powell, calling him a “bad head of the Fed,” while giving a speech on the economy in Pennsylvania. He also questioned the legitimacy of former President Joe Biden’s nominees, raising the prospect that they could also be fired.
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