What Impact Might the Fed’s Upcoming Rate Reduction Have on Bitcoin and Ethereum? Insights from Historical Trends

Key Takeaways:

• The Fed’s anticipated rate reductions in late 2024 prompted rallies in the crypto market, with Bitcoin and Ethereum both achieving double-digit increases in the initial weeks.
• Subsequent cuts resulted in weaker or even negative movements, as the market had already factored in a more accommodative policy.
• Cryptocurrency typically responds most vigorously to the initial indications of a policy change rather than to ongoing easing.
• With another rate reduction anticipated this month, it remains uncertain if past patterns will repeat. Other influences such as market sentiment, regulatory changes, and global uncertainties could also be significant.

The Federal Reserve is projected to lower interest rates by 25 basis points later in October. The CME Group’s FedWatch Tool indicates a 96.7% probability of a rate cut at the upcoming meeting. Concurrently, the crypto market faces pressure from various macroeconomic factors, including the Donald Trump-China tariffs and concerns regarding U.S. regional banks and non-performing loans.

What impact might the next rate cut have on cryptocurrency? When the Fed reduces rates, the market frequently experiences short-term fluctuations. Although rate cuts are generally perceived as beneficial, the actual effects depend on more than just policy: broader economic conditions, market sentiment, regulatory frameworks, and geopolitical developments are all crucial.

This analysis reviews the last four Fed rate cuts — September 18, 2024, November 7, 2024, December 18, 2024, and September 17, 2025 — and assesses their immediate effects on Bitcoin and Ethereum following the announcements.

The cut in September 2024 initiated the most significant rally of the cycle. Within a week, Bitcoin surged approximately 6.6% to around $64,300, while Ethereum increased nearly 13% to $2,650. Over the subsequent month, both cryptocurrencies gained about 11%. This suggests that investors responded positively to the Fed’s initial clear shift toward a more accommodative policy.

Following the November 2024 cut, Bitcoin experienced a 16% increase within a week and over 32% in a month. Ethereum rose by 17% and 47.5% during the same timeframes.

By December 2024, the rally began to decelerate. Bitcoin briefly surpassed $108,000 before retreating below $100,000. Ethereum experienced a decline of about 10% in the following month.

The latest cut in September 2025 occurred amid already low rates and diminished sentiment. Bitcoin fell approximately 7% in the next month, while Ethereum dropped around 13%. This may indicate that the effects of monetary easing are beginning to wane for cryptocurrencies.

The chart below illustrates the price of Ethereum in relation to changes in the Fed’s rate. It depicts general ETH/USD price trends from September 2024 through October 2025. The right axis indicates the total decline in the Fed funds rate since the onset of the easing cycle.

The data reveals that the initial rate cuts in September and November 2024 coincided with robust crypto rallies, whereas the subsequent cuts in December 2024 and September 2025 resulted in smaller or even negative movements. This suggests that the market’s response diminished as investors had already accounted for a more lenient policy.

What It Means

The first two rate cuts in September and November 2024 yielded the most substantial gains, with Bitcoin and Ethereum both recording double-digit increases in the following weeks.

However, by late 2024, the enthusiasm appears to have diminished. Markets had already integrated expectations of ongoing easing, and later cuts provided minimal or no benefits. The most pronounced reactions occurred early in the cycle, when investors first detected a shift toward looser policy.

As the Fed is anticipated to implement another rate cut this month, historical patterns indicate that Bitcoin and Ethereum often respond swiftly at first but lose momentum as the easing cycle progresses. Market sentiment, regulatory factors, and global uncertainties also contribute, suggesting that monetary policy is only one aspect of the overall picture.

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