Fed Shows Unity for Rate Cuts in 2025, Impacts Crypto
- U.S. Federal Reserve plans rate cuts in 2025 amid economic shifts.
- Leadership changes unified policy stance, supporting financial shifts.
- Potential boosts for crypto assets as macroeconomic conditions evolve.
The U.S. Federal Reserve is set to initiate rate cuts in September 2025, garnering unexpected unity among policymakers as announced by JPMorgan Chase leadership.
This pivot aligns with board changes, potentially boosting risk assets, including crypto, amid a weakening U.S. labor market.
The Road to 2025 Rate Cuts
The U.S. Federal Reserve is anticipated to commence a cycle of rate cuts in September 2025. These decisions come amidst unexpected unity among policymakers and changing economic indicators. This alignment reflects shifts in the Fed board’s composition.
Key figures include Jerome Powell, who favors early accommodations due to softer economic conditions. Newly appointed Stephen Miran supports this unified pro-cut sentiment within the FOMC. Quoting Michael Feroli, Chief U.S. Economist at J.P. Morgan:
For Fed chair Jerome Powell, the risk management considerations at the next meeting may go beyond balancing employment and inflation risks, and we now see the path of least resistance is to pull forward the next cut of 25 basis points (bp) to the September meeting.
This move aligns with a downturn in the labor market.
Impact on the Crypto Market
Potential impacts include broad support for risk assets, specifically equities and credit. The crypto market could see increased investments as investors look to alternative yields. Easier monetary policy may enhance flows into digital assets.
Economic indicators suggest a weaker U.S. dollar, potentially benefiting assets like BTC and ETH. J.P. Morgan researchers indicate such conditions favor international capital flows into emerging markets and crypto alike.
Market Reactions and Historical Insights
The crypto community and institutional players are poised to react to these macroeconomic shifts. Monitored indicators include DeFi total value locked and overall market liquidity. Such trends often precede minutes-long price spikes or broad market movements.
Insights from historical economic cycles suggest that monetary easing supports risk assets. The last easing cycle saw an uptick in BTC, ETH, and DeFi tokens. Market analysis indicates potential growth for governance tokens as liquidity expands.
