Bitcoin News Today: Fed Rate Cut Lifts Bitcoin as ECB Stands Pat

The U.S. Federal Reserve's decision to cut interest rates by 25 basis points on October 29 has sparked renewed optimism in financial markets, particularly in the cryptocurrency sector. The move, which sets the federal funds rate target range at 3.75%-4.00%, marks the first easing since 2023 and signals a strategic shift toward supporting economic growth amid cooling inflation and softening labor market conditions, according to a Coinotag report. The Fed also confirmed the end of quantitative tightening (QT) effective December 1, a move that will halt the reduction of its balance sheet and inject additional liquidity into markets.

Bitcoin, which had struggled to maintain stability amid broader market volatility, has found a floor as the rate cut reduces borrowing costs and redirects capital toward risk assets. U.S.-listed Bitcoin ETFs have seen inflows exceed $6 billion in October alone, pushing global crypto assets under management toward $300 billion, the Coinotag piece noted. Analysts at Nomura, a leading financial services firm, revised their forecasts to anticipate no further rate cuts in December, emphasizing that incoming data remains "modestly dovish" but insufficient to trigger aggressive easing. This cautious stance reflects the Fed's balancing act between supporting growth and maintaining inflation control, with core prices still above the 2% target.

The Fed's policy pivot contrasts sharply with the European Central Bank's (ECB) expected inaction. Barclays analysts revised their projections, stating the ECB will maintain its 2% deposit rate through the end of 2026, citing a lack of "conviction" from officials on when to alter policy, in an Investing.com article. Recent trade agreements between the U.S. and China, as well as the EU and the U.S., have eased some growth risks, but geopolitical tensions and economic uncertainties persist.

Political dynamics also loom over the Fed's independence. JPMorgan CEO Jamie Dimon warned that President Donald Trump's selection of the next Fed chair could influence monetary policy, despite Trump's public assertions of supporting central bank autonomy, as reported in an article in The National News. Dimon emphasized the necessity of an independent Fed to ensure a "healthy environment" for markets. The Treasury Department has narrowed the shortlist for Powell's successor to five candidates, with final decisions expected in November.

While the Fed's rate cut has bolstered risk assets, challenges remain. The Fed's dual mandate of price stability and maximum employment requires careful navigation of mixed economic signals. Global policy trends, including the ECB's and China's easing measures, create a synchronized environment favorable to risk-taking but underscore the need for data-dependent decisions, as noted in the Coinotag piece.

As markets digest these developments, investors remain cautious. The Crypto Fear and Greed Index, a gauge of investor psychology, stands at 32, indicating lingering fear despite structural demand for Bitcoin. With leverage unwinding and institutional flows aligning, the path forward hinges on economic data and geopolitical stability.