- The Fed is likely to cut rates by 25 basis points.
- Crypto markets react positively to rate cuts.
- BTC, ETH could benefit from increased liquidity.
The likelihood of the Federal Reserve reducing interest rates by 25 basis points in October 2025 stands at 87.7%. This expectation influences markets, affecting asset allocation and encouraging flows into risk assets like cryptocurrencies, as reflected in historical trends.
The probability of the Federal Reserve cutting interest rates by 25 basis points in October 2025 is now 87.7%, as revealed by the CME FedWatch tool. This potential move could have far-reaching implications for financial markets, particularly the cryptocurrency sector.
With the high chance of a Federal Reserve rate cut in October, market participants are closely monitoring crypto asset flows. Investor sentiment leans bullish due to anticipated macroeconomic easing.
The Federal Reserve is expected to lower rates further, following a 25 basis point reduction in September. Jerome Powell, Chair of the Federal Reserve, mentioned this as a “risk management cut.” The potential October cut has made investors eye crypto assets, particularly BTC and ETH.
The expected rate cut could lower borrowing costs, prompting portfolio rebalancing towards risk assets. Institutional investors often respond by increasing crypto allocations. The upcoming decision might enhance liquidity in the market, affecting BTC and ETH trading volume.
Historically, previous rate cuts in 2024 and recent months led to the appreciation of major cryptocurrencies such as BTC and ETH. DeFi protocols also experienced increased Total Value Locked, indicating confidence in more favorable borrowing conditions.
The Federal Reserve’s decision could increase DeFi activity and incentivize allocation to yield-generating products. However, any hesitation by the Fed may alter these expectations. Market analysts suggest examining both past trends and on-chain data to understand possible outcomes.
“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. In considering additional adjustments, the Committee will carefully assess incoming data, the evolving outlook, and the balance of risks.” — FOMC Statement
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