United States Federal Reserve finally announced a 25 basis points rate cut for the first time in 9 months. The agency cited a surge in inflation and weaker jobs market across the country as the reasons for the rate cut. 

For the crypto market, the rate cut offers relief which was much awaited by market participants. Following the cut, Bitcoin and altcoins have put up some gains as the interest rate cut serves as a positive catalyst. 

Fed Cuts Interest Rates by 25bps

Prior to the Federal Open Market Committee (FOMC) meeting on Sept. 17, 2025, market watchers were divided between a 25bps and 50bps rate cut. However, the US Fed settled on a 25bps rate cut after the FOMC meeting, doing what most economists and traders expected. 

“The Committee seeks to achieve maximum employment and inflation at the rate of 2 percent over the longer run…In support of its goals and in light of the shift in the balance of risks, the Committee decided to lower the target range for the federal funds rate by 1/4 percentage point to 4 to 4‑1/4 percent,” the Fed said in a statement.

It dropped the benchmark federal funds rate range to between 4.00% and 4.25%. This marks the first rate cut by the agency in nine months. The last rate cut happened in December 2024 and was a 25bps cut too. 

However, Jerome Powell’s had a neutral monotone. But still, market watchers interpreted a dovish forward guidance via adjusted rate projections. October rate cuts odds are already surging as per the CME Fed Watch Tool. 

For Americans, the rate cut means that citizens will now be able to borrow at lower rates. However, the Fed’s decision to cut rates on Wednesday carries intensified inflation risks. There are also increased concerns over the Fed’s independence following the previous political pressure by U.S President Donald Trump for the Fed chair to cut rates. 

Bitcoin and the Crypto Market Reacts to September Rate Cut

The easing of the monetary policy by the Fed was received positively by crypto market participants. Fueled by the rate cut, the total crypto market cap has surged to $4.09 trillion as Bitcoin and altcoins rally. 

However, according to data by CoinMarketCap, altcoins have seen more push than Bitcoin following the September rate cut. Bitcoin has only rallied by 0.04% to $117,250 as of this writing. Meanwhile, Ethereum (ETH) has rallied by 1.63% to $4,588. 

Other altcoins including XRP, BNB, Solana (SOL), Dogecoin (DOGE), Tron (TRX) and Cardano (ADA) have rallied by 1.80%, 4.28%, 4.08%, 4.77%, 1.16% and 3.42%, respectively.

US Dollar Dips, S&P 500 Eyes More Gains on Fed’s 25bps Rate Cut

However, unlike the crypto market which rallied following the rate cut, the US Dollar plunged. As observed by the The Kobeissi Letter, the dollar fell to early 2022 level following the announcement. 

“For the first time in 2025, the Fed just cut interest rates by 25 basis points and “blamed” a weaker labor market. Immediately after, the US Dollar fell to its weakest level since February 2022,” The Kobeissi Letter noted. 

Besides the US Dollar, The Kobeissi Letter identified that the Fed cut rates with the S&P 500 already skyrocketing to an all-time high. Potentially, the stocks could continue to surge on the back of the 25bps interest rate cut, bearing historical price actions. 

“The Fed is now officially cutting rates with the S&P 500 at a record high. The last 20 times this happened, the S&P 500 rose an average of +13.9% over the next 12 months, per Carson,” The Kobeissi Letter said, projecting a potential rally for the S&P 500.