In a surprising turn of events, the Federal Reserve’s recent decision to implement a 25 basis point rate cut has not led to the anticipated positive rally in the cryptocurrency market. Instead, Bitcoin plummeted below $109,000, marking a significant downturn for a sector that was hoping for a resurgence by the end of October. Meanwhile, Ethereum also witnessed a decline, dropping under the $4,000 mark. This performance has resulted in the worst October for cryptocurrencies in over seven years, with a total market cap loss amounting to approximately $100 billion.
Initially, the Fed’s move to lower its benchmark interest rate to the range of 3.75% to 4%, the lowest level in three years, was seen as a potential catalyst for a risk-on approach among investors. However, rather than boosting crypto prices, Bitcoin fell over 3% shortly after the announcement. This reaction occurred amidst renewed geopolitical tensions, notably President Donald Trump’s threats of nuclear testing just hours prior to a summit with Chinese President Xi Jinping.
The complexities of U.S.–China relations appear to be overshadowing monetary policy adjustments. Despite expectations that easing monetary policy would nurture a more favorable trading environment for cryptocurrencies, traders are adopting a cautious stance, seemingly unwilling to fully commit until there is more clarity on geopolitical dynamics.
A momentary surge in optimism emerged following reports of a trade deal between the U.S. and China, which confirmed a one-year agreement focused on rare earths and critical minerals. This deal also included a partial rollback of tariffs, with the U.S. reducing fentanyl-related tariffs and overall tariffs on Chinese goods, while Beijing pledged to increase rare earth exports and review technology transfer laws.
Following the announcement, Bitcoin briefly surged by $2,000, climbing from around $108,000 to over $110,000. Other major cryptocurrencies, including Ethereum, mirrored this small recovery. However, this enthusiasm quickly dissipated as skepticism regarding the deal’s longevity took hold among traders. The lack of solid long-term commitments from either side raised questions about the deal’s effectiveness in sustaining market momentum.
Looking ahead, the cryptocurrency market braces itself for November, a month that historically experiences subdued trading volumes alongside mixed price action. Market analysts suggest that the current situation may reflect the tail end of a post-halving bull cycle. While institutional investments remain steady, retail traders are now showing signs of hesitation, caught between the Fed’s dovish policy and the heightened geopolitical risks.
As it stands, Bitcoin remains confined beneath its crucial resistance level, illustrating that macroeconomic relief alone may not be sufficient to rekindle investor interest. The Federal Reserve’s rate cut and the recent truce between Washington and Beijing have yet to instill the level of confidence necessary for sustainable growth in the crypto sector. For now, discerning investors find themselves waiting for stronger signals before making moves in this tumultuous environment.
