Fed Cuts Rates by 25bps as Markets Brace for 2026 Shift – Here Is What It Means for Bitcoin

• Fed cuts rates by 25bps to 3.5%–3.75%.
• Bitcoin holds near $92K with muted reaction.
• Fed announces new Treasury purchases, hinting at QT’s end.

The U.S. Federal Reserve lowered interest rates by 25 basis points, bringing the target range to 3.5%–3.75%. This marks the Fed’s third rate cut of 2025 and reflects rising concerns over slowing growth, a softening labor market, and inflation that remains above target. The move was widely expected, but traders immediately turned their attention to Powell’s press conference for signals on whether more cuts are coming in early 2026.

Bitcoin Reacts Quietly to the Decision

Bitcoin slipped from $94,000 to $92,000 ahead of the announcement and held steady near $92K afterward. The muted move shows traders were largely prepared for the cut. Limited upside momentum suggests markets are waiting for clarity on Powell’s tone — especially whether he hints at a pause or additional easing in the coming months.

Fed Shifts Toward Liquidity Support

In a notable development, the Fed announced it will begin purchasing short-term Treasury securities to ensure ample reserve levels. This marks a key shift away from its prior quantitative tightening stance and hints at a softer policy path into 2026. Rising unemployment, slower consumer demand, and persistent inflation all contributed to the Committee’s decision to ease financial conditions.

A Divided FOMC Signals Uncertain Path Ahead

The vote was not unanimous.

• 9 members voted for the 25bps cut
• Stephen Miran pushed for a deeper 50bps cut
• Austan Goolsbee and Jeffrey Schmid wanted no cut at all

The split vote highlights growing tension inside the Fed as it weighs inflation risks against weakening labor data — a dynamic that will heavily shape the 2026 policy landscape.

What Comes Next for Markets

The next FOMC meeting arrives in late January 2026, and expectations are already forming. Traders now view Powell’s guidance as the key catalyst for crypto, equities, and rates markets. If the Fed signals more cuts, liquidity conditions could improve quickly — a development that historically benefits Bitcoin and risk assets. If Powell signals caution, BTC may remain rangebound into early 2026.

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