The Federal Reserve cuts interest rates as scheduled but signals caution, causing the cryptocurrency market to fall promptly.

Source: PortaldoBitcoin Original Title: Fed cuts interest rates as expected but signals slow pace of cuts and cryptocurrency market reacts poorly Original Link: https://portaldobitcoin.uol.com.br/fed-reduz-juros-como-esperado-mas-sinaliza-ritmo-lento-de-cortes-e-mercado-de-criptomoeda-reage-mal/

Federal Reserve cuts rates as expected but signals cautious approach

The Federal Reserve decided on Wednesday (10th) to cut U.S. interest rates by 0.25 percentage points, bringing the target range to 3.50%-3.75%, marking the third consecutive rate cut. The Federal Open Market Committee (FOMC) approved the decision with a 9-3 vote, with a minority supporting no change in rates. Markets expect future rate cuts to be more gradual and cautious.

This cautious stance triggered a negative reaction in the cryptocurrency market. As of 4:10 PM Brasília time, Bitcoin fell 1.2% in the past 24 hours, trading at $92,704. XRP declined 3.3%, BNB decreased 1.5%, and Solana dropped 2.9%. Ethereum, however, performed differently, rising 0.5% to $3,390.

FOMC’s cautious stance

In its post-meeting statement, the FOMC said: “In assessing the range of future adjustments to the target range for the federal funds rate, the Committee will carefully evaluate incoming data, the evolving outlook, and the balance of risks.”

This wording is identical to that of December 2024, when the FOMC suggested that the committee might have completed the current rate cut cycle. Prior to September, the FOMC had not approved any rate cuts. Now, markets believe that after three consecutive cuts, there is limited room for further reductions.

Federal Reserve Chairman Jerome Powell stated at the press conference that this rate cut positions the Fed comfortably. He said, “Our stance is good, and we can watch how the economy develops.”

New tools for liquidity injection

Another important measure announced by the Fed is the start of government bond repurchases. This measure serves as an additional tool to inject liquidity into the global financial system, benefiting all markets.

Tasso Lago, founder of Financial Move, said that a clearer signal from the Fed regarding government bond repurchases should accelerate the appeal of risk assets. “Additionally, the statement released a more neutral signal regarding rate cuts in 2026, indicating that the monetary authorities consider the current interest rate level appropriate. We now need to pay attention to subsequent developments,” he said.

Market outlook and risk warnings

This decision has been widely anticipated by the market, whether through CME interest rate futures or the expectations of market participants. Lower interest rates benefit risk assets like cryptocurrencies because they reduce returns on conservative investments such as U.S. Treasuries, prompting investors to seek better risk-reward balances, such as stocks and cryptocurrencies.

However, investors should exercise caution, as sharp volatility often occurs during Powell’s speeches. Additionally, the recent 24-hour gains in Bitcoin and altcoins may lead to “buying on rumors and selling on facts,” triggering profit-taking.

Understanding Powell’s speech is crucial to grasp the Fed’s next moves. André Franco from Boost Research emphasized that if Powell adopts a more “hawkish” stance, favoring higher interest rates, markets could decline again.

Political background

It is worth noting that Powell’s term is ending soon, in May 2026. President Trump has explicitly expressed dissatisfaction with the current Fed Chair’s performance and indicated that economist Kevin Hasset (who previously advised a compliance platform) should be his pick to succeed the monetary authority.