Will the Fed’s Expected Rate Cut Matter Much for Bitcoin?

The "Trump trade" took center stage late Tuesday into early Wednesday, with crypto prices surging as Bitcoin hit a new all-time high, buoyed by early signs of a potential Republican return to the White House.

Bitcoin’s uplift came as the market began pricing in a likely win for former President Donald Trump on Election Day, with crucial swing states finalizing votes earlier than many had predicted.

On Wednesday, Bitcoin posted its single-largest daily performance since March 20, clinching a 9% gain to close out above $75,560, according to TradingView’s Crypto Index.

While markets are salivating for a rally into next week, a U.S. Federal Reserve decision by the Open Market Committee to cut or hold its funds rate on Friday is unlikely to bolster prices, according to some.

“The decision will matter little,” FalconX’s Head of Research David Lawant told Decrypt. “But there's significant macro uncertainty as we enter 2025 under a Trump presidency.”

Lawant instead pointed to uncertainties surrounding Trump’s proposed tariffs and their impact on crypto, as well as fiscal and monetary policy decisions the former president might undertake during a second term.

Not all agree with Lawant’s take though. 

Pav Hundal, lead market analyst at crypto exchange Swyftx, told Decrypt the Fed’s decision has “every chance of being hotter for Bitcoin than the US election result.”

Lower interest rates reduce borrowing costs, increase consumer spending, and make traditionally safer investments like bonds less appealing, prompting investors to move toward riskier assets for higher returns.

“The market is already re-risking into Bitcoin,” Hundal said. “A 25 basis point or bigger cut will just accelerate that move and make a six-figure Bitcoin price by year-end an even more likely scenario.”

A change to rates often boosts demand and valuations for stocks as well as crypto as investors seek better growth opportunities in a low-rate environment.

“It is FOMO layered on FOMO right now in the markets,” Hundal added. “We saw a clear accumulation trend immediately after the last rate cut, so it’s safe to say a 0.25% cut would be very positively received.”