The U.S. Federal Reserve cut the federal funds rate by 25 basis points to 4.0%-4.25% on September 17, 2025, marking a significant shift in monetary policy aimed at addressing weakening labor market data. Fed Chair Jerome Powell characterized the move as a "risk management cut" rather than the start of a new rate-cutting cycle, emphasizing decisions would be made "meeting-by-meeting" based on economic data.
Bitcoin's price reacted with immediate volatility, dropping below $115,000 during Powell's statements and fluctuating around $115,800 post-announcement. This contrasted with the Nasdaq's 1.7% surge, highlighting a divergence from traditional risk assets. Despite the price dip, institutional interest remained strong with $2.1 billion in spot ETF inflows confirmed, indicating continued confidence in Bitcoin's long-term value.
Historical seasonal patterns suggest potential recovery, with September typically showing declines ("Red September") followed by October rebounds ("Uptober"). On-chain metrics show long-term holders increasing positions, while exchange supply ratios indicate accumulation. The Fed's economic projections remain optimistic for above-potential growth through 2026, though future rate decisions will depend heavily on upcoming jobs data and PCE inflation readings.