BTC Price, Nasdaq, S&P 500 See Volatility, Amid Fed’s Rate Cuts

Key Insights:

• Bitcoin (BTC) price experienced a brief moment of volatility as the Fed announces a rate cut.
• The crypto market has mostly steadily reacted to the cut, showing that the market has already priced it.
• Fed expects to cut rates by 0.25% each in the remaining two meetings of the year.

Bitcoin price saw a wild swing on Wednesday in reaction to the Federal Reserve cutting interest rates. The flagship asset, which had risen to $116,000 in expectation of the rate cut, fell to $114,000 after the announcement.

Bitcoin (BTC) Price Steadies at $115K

While it has now settled around $115,000, the price swings appear tied to some holders’ decision to cash in on the much-anticipated cut. However, it resulted in $147 million of liquidations in the past 4 hours, with long positions mostly affected.

The impact on long positions is not completely surprising given how most traders were long ahead of the Fed meeting. CryptoQuant analysts identified this, noting that exchange open interest turned positive for the first time since September 13.

Still, it is likely because some holders decided to sell the news after announcing the rate cut. Glassnode data highlighted three waves of BTC inflows exceeding $25 million per block to centralized exchanges in the last 24 hours.

It said:

“The latest wave aligned with BTC’s pullback from $117.2k, suggesting a partial spot market sell-off.”

Meanwhile, the Fed’s decision to reduce the interest rates by 25 basis points was also expected. Most market observers had expected such a percentage cut, particularly given the recent jobs data and signs of a struggling economy.

Even still, the  Fed Chair, Jerome Powell, described it as a risk management cut. He defended the refusal to cut rates earlier while noting that the economy is in a dicey position presently.

These sentiments appear to have impacted market reaction to the cut, with muted performances in both crypto and stock markets.  Even beyond Bitcoin, other crypto assets also maintained mostly neutral performance.

CoinMarketCap data shows that the crypto market cap is down by 0.57% in the past 24 hours, even though this is now above $4 trillion. Major cap tokens also had mixed performance with Bitcoin, XRP, TRX, and LINK declining.

Other tokens such as ETH, BNB, DOGE, ADA, and HYP are trending up. Solana also has snapped out of the price correction that saw it fall to $230 on September 15.

Still, the muted performance in the crypto market is likely because the market had already priced in the rate cut.  The same thing happened with the stock market, where the Nasdaq fell 1% in the day’s trading.

Fed Expects a 50 Basis Point Cut by Year-end

Meanwhile, the biggest news of the Fed decision was not the rate cut but the outlook for the rest of the year. The Fed is now expected to cut rates by the same 0.25% in its next two meetings of the year.

This was evident in the Fed dot plot, which showed that they expected the rate to be between 3.5% and 3.75% by the end of the year. The Fed dot plot, the rate forecast, reflects members’ expectations for the rest of the year.

It showed that 9 out of 19 members project two more cuts at the October 28 and December 9th meetings.  2 out of 19 expect one more cut, while 6 see no reason for further cuts. One member is expecting one rate hike.

Interestingly, newly appointed Fed governor Stephen Miran expects five more cuts this year. Miran was recently appointed to serve the remainder of Adriana Kugler’s term until January 2026. He had called for a 0.5% cut in September. The Fed expects only 0.25% cuts in 2026 and 2027, signalling the intention to become restrictive.

Meanwhile, President Donald Trump, calling for massive cuts, did not seem impressed. In a post on Truth Social, he described the recent cut as tiny, noting he would have cut by 100 or 200 bps. He threatened to fire Powell if the Fed chair fails to cut rates by 100 bps in the next meeting.