Last week we noted that interest rate cycles do not appear to drive Bitcoin’s long-term performance. The question remains: do Fed rate moves shape Bitcoin’s short-term price action?
Bitcoin’s Short-Term Reaction to Fed Moves: The 25 Basis Point Case
16 September 2025 - 19:04 CEST
With the Fed widely expected to cut rates by 25 basis points (0.25%) on 17 Sept, history offers some guidance. Looking at FOMC decisions since 2018, the average Bitcoin returns around different rate moves show a clear pattern. On average, Bitcoin has posted modest gains following such moves: +0.4% over 1 day and +3.6% over 7 days, though performance tends to fade by the 30-day horizon. In other words, incremental cuts have typically delivered short-lived relief rallies rather than durable momentum.
(Source: Coinmetrics, FiscalData)
By contrast, larger, emergency cuts (–1.00%) have triggered sharp one-day selloffs (–5.7% on average) but paved the way for powerful medium-term rallies (+9% in 7 days, +29% in 30 days). Meanwhile, cuts of 50 basis points have historically produced weaker outcomes, often drifting into negative territory over subsequent weeks.
On the hiking side, the pattern is clearer: small increases (+0.25%) bring short-lived relief rallies (+2% on day one) that reverse over a month, while larger hikes (+0.50% and above) consistently weigh on Bitcoin across all time horizons.
If the Fed's 17 Sept move comes in line with expectations at –25 bps, Bitcoin’s historical playbook alone points to a modest, short-term upside for the price of Bitcoin, but not the kind of sustained trend shift seen after larger policy shocks.
As always, investors should closely monitor the way in which the message is delivered through the Fed's written and verbal communications, as well as the wider market dynamics and the macroeconomic context, rather than simply relying on a review of past behaviour of the asset.
