Fed Rate Cut Boosts Bitcoin Outlook: Risk Management Move Sparks Crypto Optimism

The Federal Reserve has shifted to easing monetary policy after ten months of monitoring the U.S. economy. On Wednesday, the central bank reduced its benchmark interest rate by 25 basis points to 4%-4.25%, the lowest level since December 2022. Fed Chair Jerome Powell described this as a "risk management cut" amid moderated economic growth and a slowing labor market. The decision follows weakening U.S. employment data, with August adding only 22,000 jobs and unemployment rising to 4.3%. Despite political pressure from President Trump criticizing Fed hesitation, Powell emphasized the institution's independence. Following the rate cut, bitcoin initially gained 1% before declining 1.5% to $115,092. Analysts suggest the Fed's dovish stance could create favorable conditions for Bitcoin, with 21Shares strategist Matt Mena noting potential for "new highs by year-end." The updated dot plot indicates possible additional rate cuts, with most FOMC participants anticipating two more reductions this year.