Wednesday 25th June 2025

Interest rates might sound like a boring central bank thing, but they quietly steer the entire economy, including crypto. When rates go down, money gets cheaper to borrow, markets breathe a little easier, and risky assets like crypto often get a shot of adrenaline. In 2025, the question on everyone’s lips: when will the Fed finally cut?

What Is a Rate Cut?

The Federal Reserve (aka the Fed) sets a benchmark interest rate called the federal funds rate. This rate impacts how expensive it is for banks to borrow money and by extension, affects everything from your mortgage to your crypto investments.

A rate cut means the Fed is lowering that rate, often to:

• Stimulate the economy
• Counteract rising unemployment
• Encourage consumer spending and investment
• Offset slow growth or deflation risks

But it’s a double-edged sword: lower rates can stoke inflation if used recklessly.

Why It Matters for Crypto

Lower rates make traditional savings accounts and bonds less appealing, which sends money chasing higher returns elsewhere, like the stock market, or crypto.

Crypto loves low rates for a few reasons:

• Investors take on more risk in a low-rate environment
• More liquidity enters the market (cheap money = more money circulating)
• The dollar often weakens, pushing interest in decentralized alternatives

In short: rate cuts often = good vibes in crypto.

When Was the Last Fed Rate Cut?

The last rate cut was in March 2020, during the pandemic panic. The Fed slashed rates to nearly 0% to stabilize the economy.

And what happened to crypto?

Bitcoin (BTC) was at around $5,000 in March 2020

By December 2020, it had skyrocketed to over $28,000

And in 2021, it hit $69,000

Coincidence? Not entirely. While many factors played a role, cheap money helped fuel the bull run.

Are Rate Cuts Coming in 2025?

As of June 2025, inflation in the US has cooled significantly compared to the post-COVID spike. The Fed has held rates steady at around 4.33% but hinted that a cut could happen as early as Q3 2025.

Some key points:

• Inflation has dropped to ~2.5%
• Unemployment has ticked up slightly, raising concerns
• Global markets are cooling
• The European Central Bank and Canada have already cut rates in recent months
• Market sentiment expects the first cut by September 2025

Trump vs Powell: Politics in the Mix

With the 2024 election behind us and Trump back in office, tensions between the Fed Chair Jerome Powell and the administration are heating up again. Trump has pressured Powell to cut rates sooner, accusing him of being too slow and hurting American consumers.

However, the Fed is supposed to remain independent of politics, so Powell is treading carefully.

Still, if the Fed cuts in Q3, it may be influenced by both the data—and the pressure.

Global Trend: Rate Cuts Worldwide

It’s not just the US:

• Canada cut rates in May 2025
•  The EU followed in June
• Australia has signalled a likely cut in Q3
• China has kept rates low to stimulate their slowing economy

This coordinated easing cycle is a sign that the global economy needs a gentle push, and crypto, being global, is watching closely.

What Will Happen to Crypto When the US Cuts Rates?

Historically, rate cuts = bullish for crypto.

Here’s what might happen:

• BTC could push past its all-time highs
• Altcoins may rally harder, especially DeFi and RWA projects
• More retail investors return (because cash is losing value faster)
• More institutional players jump in, looking for returns

However, it’s not guaranteed. Timing matters. The market could "buy the rumour, sell the news."

Investor Tip: Don’t Time the Market, Prepare for It

If you’re waiting for the perfect entry, consider dollar-cost averaging (DCA). Rate cuts are bullish long-term, but markets can get messy in the short term.

A US rate cut won’t flip a switch overnight, but it sends a powerful signal to markets: we’re entering an easier money environment.

And crypto? It thrives in that kind of environment.

Get ready.

Disclaimer:

This is not financial advice. Always do your own research and speak to a financial advisor before investing. Crypto markets are highly volatile.

If you would like to support Crypto Coinfused and fuel the work we are doing to help spread the word about crypto, please donate if you can, it helps more than you think!

Buy Me a Coffee