The Federal Reserve is expected to announce an emergency interest rate cut along with a liquidity injection at its policy meeting later today, as global markets reel from extreme volatility, rising recession fears, and the fallout from former President Donald Trump’s new tariff policies.
Fed Under Pressure to Act Fast
With US equities suffering their worst back-to-back losses since the 2008 crisis and bond yields collapsing, traders are now pricing in up to 125 basis points of rate cuts by the end of 2025. There's a 40% chance the Fed could slash rates within days — even before its next scheduled meeting on May 7.
Bob Michele, global head of fixed income at JPMorgan Asset Management, warned that the Fed cannot afford to wait for the financial system to break. “We cannot believe the Fed will wait until something breaks before responding,” he said.
Impact on Crypto Market: Bullish Momentum Returns
The crypto market has responded sharply to expectations of Fed intervention. Bitcoin and other major cryptocurrencies rallied over the weekend as investors bet that lower interest rates and increased liquidity will drive demand for alternative assets like crypto.
Historically, rate cuts and quantitative easing have been bullish for digital assets, as they weaken the dollar and push investors toward decentralized, non-inflationary assets.
Crypto traders see the Fed’s expected move as a signal that the era of “easy money” might return sooner than expected. Bitcoin briefly surged above $74,000, while Ethereum climbed past $4,000 amid renewed market optimism.
Arthur Hayes, founder of BitMEX, tweeted, “As the Fed goes Brrr again, risk assets like crypto will explode higher. Buckle up.”
What’s Next?
While Fed Chair Jerome Powell has maintained a cautious tone, citing still-elevated inflation, mounting financial stress may leave the Fed with little choice. A decisive rate cut and liquidity injection could set the stage for a renewed bull cycle in crypto markets.
All eyes now remain on the Federal Reserve’s announcement later today — a decision that could shape the future of both traditional and digital financial markets in 2025.
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