Bitcoin Updates: Fed’s Softer Stance Supports Both Economic Expansion and Inflation—Positive Momentum for Crypto

The U.S. Federal Reserve's move to lower interest rates by 25 basis points on October 29, 2025, had a significant impact on global financial markets, with digital assets such as

and expected to gain from the central bank's more accommodative stance. The adjustment, which set the federal funds rate at 3.75%-4.00%, was largely anticipated by market participants who had already factored it in, as noted by . Additionally, the Fed announced plans to conclude its quantitative tightening (QT) program by December 1, further loosening liquidity, according to .

Prior to the announcement, crypto markets experienced heightened volatility and initially dropped as investors reacted by "selling the news," according to

. Following the rate cut, Bitcoin (BTC) hovered near $111,700, marking a 3% decline from its daily peak, . Still, experts believe that the combination of lower rates and a halt to QT sets a supportive backdrop for riskier assets. "Periods of monetary easing often drive interest in speculative investments," one analysis observed, suggesting Bitcoin may regain its reputation as a hedge in a low-rate environment.

The Fed's latest policy reflects mounting worries about a slowing job market and economic headwinds, even as inflation approaches the 2% target. With unemployment climbing to 4.3% and some economic indicators delayed due to a government shutdown, the central bank opted for a "measured and adaptable" easing strategy, according to analysts at

. This prudent shift is seen as an attempt to balance inflation management with economic support, a development viewed positively by crypto investors. "Historically, a softer dollar and declining yields have benefited Bitcoin and other tangible assets," Bitget analysts noted.

Institutional interest in cryptocurrencies remained strong.

reported an increase of 2,772 in its holdings during the third quarter of 2025, and Bitcoin ETFs continued to attract net inflows, as stated by . Tether's Q3 performance underscored the expanding influence of stablecoins, with its USDT supply exceeding $183 billion, according to . Meanwhile, companies like MicroStrategy slowed their BTC purchases, though the broader outlook for crypto remained optimistic.

Looking forward, investors will pay close attention to the Fed's December meeting for indications about the trajectory of further rate reductions. If a third cut occurs in 2025 alongside the official end of QT, it could further boost crypto through increased liquidity. Nevertheless, potential risks persist. A shift back to a more hawkish policy or unexpected inflation could spark renewed volatility, especially as geopolitical and regulatory uncertainties linger.

At present, the Fed's recent moves have strengthened the perception of a supportive policy environment, positioning crypto to benefit from lower yields and a weaker dollar. As one analyst remarked, "The Fed is no longer solely prioritizing inflation control but is now also addressing economic vulnerabilities—a change that may provide fresh momentum for Bitcoin and Ethereum."