The price of Bitcoin is reacting positively to the Fed’s interest rate cut and its contradictory economic outlook. While plans for further cuts support risky assets, analysts predict that Bitcoin could reach new record levels in the final quarter of the year.
The price of Bitcoin is, for now, reacting quite positively to the interest rate cut made by the US Federal Reserve (Fed) last Friday. The primary reason for this is the set of expectations the Fed shared for the coming years following its decision. These expectations are quite contradictory and are causing the Fed to show its hand.
A Contradictory Federal Reserve
In the economic projections accompanying the interest rate decision, the Fed announced the following points:
- They expect higher economic growth.
- They expect lower unemployment.
- They expect higher inflation.
- And they plan to make more interest rate cuts.
The big question is this: If a stronger economy and higher inflation are expected, why are MORE interest rate cuts desired? Normally, fewer rate cuts would be anticipated in such a scenario.
If the Fed’s expectations materialize, which the current outlook supports, the economy will no longer need additional stimulus.
This is precisely why Bitcoin and other risky assets reacted so strongly to the interest rate decision.
Finspresso Macchiato 18-09 | de dagelijkse marktupdate die je bij een espresso leest ☕️ Markten groen na renteverlaging Amerikaanse centrale bank 💸💰 Je bent er ongetwijfeld van op de hoogte dat de Amerikaanse centrale bank gisteren zijn beleidsrente met 0,25 procentpunt…pic.twitter.com/eR9xKU0UPc— Thom Derks 🖊 (@_Thom_Derks_) September 18, 2025
In essence, the Fed is revealing its cards here and indirectly showing that it is bowing to the power of Donald Trump. Trump had demanded interest rate cuts, and it now appears he is getting them.
Is Bitcoin Heading for New Record Highs?
Barring a major panic (for example, a collapse in the labor market or a rapid rise in inflation and long-term interest rates), the path appears clear for Bitcoin to reach new all-time highs in the fourth quarter of the year.
For now, thanks to this interest rate decision by the Fed, all indicators are flashing a green light for Bitcoin.
Two more interest rate cuts are planned for 2025, even though the economy does not appear to need them at first glance. From this perspective, it seems Trump has achieved his goal: interest rates are falling.
For the average American, this situation is not very positive, as it means higher inflation. However, it is quite beneficial for investors, as this development will most likely drive the prices of financial assets higher.
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