Bitcoin News Today: Fed's Rate Cuts to Trigger $7.4T Liquidity Surge into Stocks, Bitcoin

The Federal Reserve is poised to cut interest rates for the second consecutive meeting this week, a move analysts are characterizing as a "low-risk" strategy to navigate a fragile economic landscape shaped by trade tensions and inflationary pressures, Morningstar reports. The decision, expected to reduce the key rate by 25 basis points, will be accompanied by a policy statement at 2 p.m. ET and a press conference by Chair Jerome Powell at 2:30 p.m. ET. Markets are also watching for signals on whether a third cut in December is likely, contingent on the September CPI report.

The rate cut follows a broader shift in Fed policy, with officials hinting at ending quantitative tightening (QT) by reinvesting maturing mortgage securities into Treasuries. This pivot has already contributed to a decline in the 10-year Treasury yield, reflecting investor confidence in the central bank's ability to manage liquidity. The move aligns with a global trend of easing monetary policy, as central banks in Asia and Europe also adjust rates to support growth amid slowing demand.

The economic context for the Fed's decision is further complicated by ongoing trade negotiations between U.S. President Donald Trump and Chinese President Xi Jinping. Their meeting at the APEC forum in South Korea, scheduled for Oct. 31-Nov. 1, is seen as a critical opportunity to avert a 100% tariff hike on Chinese goods set to take effect on Nov. 1, according to U.S. News. Trump has framed the tariffs as a lever to pressure China on rare earths and EV battery component exports, while Xi's administration has signaled openness to compromise. A deal could ease inflationary pressures, which have contributed to a 0.4 percentage point increase in headline inflation this year.

The Fed's rate cut is also expected to trigger a $7.39 trillion liquidity surge from money market funds into risk assets like stocks and Bitcoin by 2026. With yields on Treasury bills projected to fall below 4%, investors may reallocate $739 billion into equities and bonds, amplifying market rallies seen in 2009. Bitcoin, already seeing $3.5 billion in ETF inflows in October 2025, could see further gains if institutional demand intensifies.

Retailers, meanwhile, are navigating the fallout from Trump's tariff policies. Walmart has outperformed Target, with its stock up 18% year-to-date compared to Target's 31% decline. Walmart's ability to absorb cost pressures through supply chain efficiencies and aggressive pricing has positioned it as a beneficiary of post-tariff retail dynamics, while Target's reliance on culturally driven branding has left it vulnerable to shifting consumer priorities.

The Fed's rate cut comes as corporate America braces for a busy earnings season. Tech giants like Microsoft, Apple, and Amazon are set to report results amid heightened scrutiny on AI-driven growth and capital expenditures, according to Investors Business Daily. Microsoft's Azure cloud business, for example, is expected to post 38% year-over-year revenue growth, while Amazon faces questions about the impact of tariffs on its e-commerce operations.

Market participants are also monitoring the broader economic calendar, which remains sparse due to a government shutdown. The absence of key data releases has heightened uncertainty, though the Fed's rate cut is seen as a stabilizing force. As one analyst noted, "The Fed's action is a low-risk bet to bolster consumption and investment, especially in Hong Kong and other markets sensitive to U.S. policy shifts."