Stocks and Gold Ride Fed’s Wave; Crypto Left High and Dry

The U.S. Federal Reserve’s 25-basis-point rate cut in September 2025, the first of the cycle, sparked divergent market reactions across asset classes, highlighting a stark three-way split. While equities and gold rallied amid easing monetary policy, cryptocurrencies underperformed expectations, with Bitcoin and Ethereum failing to capitalize on the dovish shift. The Fed’s decision to lower the federal funds rate target to 4.00%-4.25% was priced in by markets, yet the immediate aftermath saw limited volatility in crypto, with Bitcoin trading between $115,000 and $117,000 post-announcement. Analysts attributed the muted response to pre-emptive positioning, with CryptoQuant’s Julio Moreno noting the 25-bps cut was “long anticipated” and already factored into pricingCrypto Markets Fail To Surge Following Fed Rate …^[2].

The S&P 500 and Nasdaq 100, however, surged to record highs in the lead-up to the Fed’s move, reflecting optimism over easier monetary conditions and potential ETF inflows. Gold also benefited, with prices rising as investors sought refuge amid inflation concerns and a weaker dollar. This contrast underscored the uneven impact of rate cuts, with risk assets like equities and gold outperforming crypto. Morgan Stanley strategists highlighted the deteriorating relationship between bond yields and the S&P 500, warning of a “brutal six months” for stocks if rates remain elevatedAnalysts Predict a 6-Month Slump for US Stocks as …^[6].

Cryptocurrencies faced a dual challenge: regulatory uncertainty and macroeconomic headwinds. The $1.7 billion in liquidations across the sector in early September 2025, according to Coinglass, exposed the fragility of leveraged positions. Ethereum and Solana were particularly vulnerable, with $1 billion and $2.5 billion in short positions at risk of reversal should prices rebound. The collapse of the “Trump rally” in crypto, coupled with new tariffs, further pressured altcoins. Dogecoin and XRP fell 10-15%, while Bitcoin’s four-year low of $112,901 triggered widespread panic selling.

The Fed’s role as a market bellwether remained pivotal. Doug Colkitt of Fogo emphasized that “when Powell blinks, risk assets breathe,” with Bitcoin’s sensitivity to central bank signals outweighing its perceived independenceCrypto Markets Fail To Surge Following Fed Rate …^[2]. Kraken’s Thomas Perfumo noted alignment between the Fed and markets on a “broadly supportive” rate-cut path through 2026, though he cautioned that execution would hinge on data like employment and inflationCrypto Markets Fail To Surge Following Fed Rate …^[2]. Meanwhile, the SEC’s expedited ETF approval process for Solana and XRP added a layer of complexity, with new products generating $55 million in trading volume within daysOpen-Up the Floodgates: A BlackRock Price Bombshell Is Suddenly Hurting Bitcoin and Crypto^[5].

Gold’s outperformance, including its best quarterly return since 1986, highlighted its role as a traditional safe haven during crypto’s struggles. Analysts like Peter Schiff argued that Bitcoin’s “loss of momentum” compared to gold signaled shifting investor preferencesThis Week in Crypto: Fed Cuts Rates, Ethereum Under ... - CoinCodex^[4]. The divergence was stark: while gold climbed, Bitcoin’s price correction to $112,901—a 2.2% drop—reflected broader risk-off sentiment and the collapse of speculative bets.

The September liquidation crisis underscored systemic risks in leveraged crypto trading. Over 407,000 traders were liquidated in 24 hours, with Bybit and Binance accounting for $897 million and $365 million in closures, respectively. This volatility, exacerbated by the “Triple Witching” options expiry and weak macroeconomic data, exposed the sector’s vulnerability to cascading selling. Analysts warned that Bitcoin’s failure to breach $118,000 and a bearish technical pattern could prolong the downturn.

In conclusion, September 2025 revealed a fractured market landscape. While the Fed’s rate cut provided a tailwind for equities and gold, crypto’s underperformance highlighted lingering structural challenges—leveraged exposure, regulatory ambiguity, and macroeconomic fragility. As markets await further policy signals and economic data, the three-way split between stocks, gold, and crypto is likely to persist, with each asset class navigating its own path of consolidation and risk.