Bitcoin Shakes After Rate Cut: Is It Time to Buy Before the Next Rally?

The Federal Reserve's first rate cut of 2025 did not go unnoticed by the markets, and Bitcoin was no exception.

The 25 basis point interest rate cut announced by the U.S. Federal Reserve (Fed) on Wednesday sparked an immediate reaction in the cryptocurrency market, with Bitcoin falling from around $117.000 to as low as $115.500 in a matter of minutes. This move, while shocking on the surface, reflects the expected volatility in digital assets amid changes in U.S. monetary policy. 

Beyond this rapid response, financial experts and crypto market analysts maintain an optimistic view of Bitcoin's medium- and long-term performance, supported by a monetary context that could favor the adoption and appreciation of cryptocurrencies.

A rate adjustment that shakes Bitcoin, but reflects expected volatility

The Federal Reserve lowered the target range for the federal funds rate from between 4,25% and 4,5% to a new range of 4,00% to 4,25%, marking the first rate cut since last year. The announcement didn't take markets by surprise, as they were already pricing in a rate cut of this magnitude. However, the immediate drop in Bitcoin's price reflected investor uncertainty about the future of US monetary policy.

In this context, expectations have focused on Fed Chairman Jerome Powell's speech, seeking to clarify whether the rate cut is a step toward a more moderate policy or simply a tactical adjustment in a changing economic context. Recent data on the U.S. labor market, indicating a slowdown in the pace of job creation along with a slight increase in the unemployment rate, have intensified concerns about economic growth, a key factor in the Fed's strategy.

The cryptocurrency market is particularly sensitive to these changes. Bitcoin, having established itself as both a risk asset and a hedge against inflation, tends to react volatilely to significant economic news. However, reports from major analyst firms, including JPMorgan, had anticipated erratic movements in the short term, noting that these fluctuations are a natural part of the adaptation process of digital assets to the evolution of traditional markets.

Federal funds futures reflected in the CME FedWatch tool show There is currently a greater than 90% probability that the Fed will make two additional 25-basis-point rate cuts at its upcoming meetings in October and December. This suggests that even if Bitcoin's price experiences momentary shocks, the macroeconomic environment will remain on a path of monetary easing, which experts say could boost demand for deflationary assets like cryptocurrencies.

Bullish resilience despite volatility

Market analysts and financial experts, such as Tom Lee, have expressed that the volatility shown by Bitcoin and cryptocurrencies after the recent Fed decision does not alter the bullish outlook they maintain on these digital assets. In essence, these fluctuations are seen as temporary movements which are adjusted as the market processes economic signals and recalibrates its expectations.

The Fed's rate cut on Wednesday primarily responds to the need to maintain the economy's momentum in the face of signs of weakening employment and persistent inflationary pressures. This context of more flexible monetary policy is driving investors to seek assets that can protect their value against the possible loss of the dollar's purchasing power and the uncertainty surrounding the economic recovery.

Bitcoin, with its limited supply and growing institutional adoption, has established itself as an attractive option within this scenario. As the Fed moves forward with moderate cuts, the trend shows renewed interest in digital assets as an alternative safe haven. This increase in demand helps stabilize the price of Bitcoin and counteracts any temporary declines that may occur.

CME FedWatch data confirms that the financial community anticipates a cycle of moderate but sustained cuts, which will strengthen confidence in financial instruments that serve as hedges against inflation. In this sense, Bitcoin is emerging not only as a speculative asset, but as an increasingly recognized store of value.

Bitcoin's role in the modern economy is gaining ground

Markets, especially the cryptocurrency market, are accustomed to daily unpredictability. However, Bitcoin's strength is measured by its ability to maintain value during complex economic cycles, as has been the case in recent years. The Fed's rate cut acts as an indirect stimulus that could favor Bitcoin's evolution toward consolidation as an institutional asset and a global store of value.

Attention remains focused on how the Federal Reserve adjusts its policies for the remainder of the year, but the case for optimists remains solid. The slowdown in the labor market, a key indicator that motivated the rate cut, combines with still-present inflationary risks, creating fertile ground for Bitcoin to continue gaining ground as an economic shield.

Ultimately, the immediate drop in Bitcoin's price following the Fed's announcement is a logical echo of the induced uncertainty, but not a change of course. Analysts assure that the bullish narrative remains intact, reinforcing the idea that Bitcoin will remain an essential component of modern portfolios as the relationship between monetary policy and digital assets matures. Momentary volatility is just part of the natural evolution of a market that continues to gain relevance and global confidence.