Fed Cuts Rates to 3.5% - 3.75%: What It Means for Bitcoin and the Entire Crypto Market

The Federal Reserve just announced its third rate cut of the year, lowering the benchmark range to 3.5%–3.75%. While stocks reacted positively, edging near record highs, $Bitcoin plunged below $90,000 with a wave of liquidations hitting the market.

The mixed reaction highlights a deeper uncertainty: Is the Fed’s shift enough to support a sustained crypto rebound—or will sticky inflation and slow job growth keep markets volatile?

What the Fed Announced, And Why It Matters for Crypto

The Fed delivered:

• A 25 bps cut (now 3.5%–3.75%)
• Third rate cut this year
• Unemployment rising
• Job gains collapsing to just 20,000 (adjusted)
• Sticky goods inflation driven by tariffs
• Only one more cut expected in 2026
• $40B Treasury bill purchases starting Dec 12 to support liquidity

Why this matters for Bitcoin

Rate cuts normally support risk assets. But this time, the messaging is mixed:

• Inflation remains “sticky”, especially goods inflation
• The labour market is slowing sharply
• Liquidity injections are small compared to past easing cycles
• Powell’s tone was cautious, not bullish

That’s why Bitcoin dumped below $90,000, triggering heavy long liquidations.

This is not a rejection of crypto—it's a recalibration of expectations. Markets hoped for a more aggressive easing cycle, but Powell confirmed this will be a slow, defensive, controlled pivot, not a 2020-style liquidity flood.

How the Rate Cut Impacts Crypto Short-Term

1. Bitcoin volatility spikes

$BTC fell to $90,210 (-2.63% weekly), confirming the market expected more from the Fed.
Rate cuts reduce borrowing costs, but sticky inflation limits the Fed’s ability to ease aggressively.

Result:
➡️ Short-term downside risk
➡️ High volatility
➡️ More liquidations likely around 88K–90K levels

2. Ethereum reacts worse than Bitcoin

$ETH is down 4.03% in 24h, sitting near $3,192.

Why?
ETH is more sensitive to macro tightening because:

• It relies strongly on liquidity inflows
• Altcoins historically underperform BTC in macro uncertainty
• Investors rotate to BTC during risk-off phases

Unless liquidity improves, ETH may continue lagging.

3. XRP, SOL, ADA: Altcoins take a deeper hit

Other altcoins show noticeable drops:

• $XRP : $2.00 (-5.86% weekly)
• $Solana : $131.15 (-8.00% weekly)
• $Cardano : $0.4165 (-6.59% weekly)

Altcoins always absorb the biggest impact when liquidity is uncertain.

Combine macro uncertainty + elevated funding rates + aggressive leverage → capitulation pockets.