Powell’s Rate Cut Lands Soft - But Uncertainty Takes Center Stage
The Federal Reserve has cut interest rates by 25 basis points, bringing the target range down to 3.5%–3.75%, but the move offered no clear bullish spark for Bitcoin. Analysts say the real drag isn’t the cut itself - it’s the lack of clarity coming from Fed Chair Jerome Powell, whose comments painted a cloudy picture for the months ahead.
Powell warned that “risks to inflation are tilted to the upside” while employment risk trends downward - a combination that signals no easy policy path. The remarks weren’t as hawkish as some expected, but they also didn't deliver the confidence markets hoped for.
Bitcoin Rally Stalls as Analysts Shift Focus to 2026
Crypto analysts quickly recalibrated expectations following the announcement. Nic Puckrin, founder of CoinBureau, noted that under Powell’s leadership, the Fed is now expected to issue only one rate cut in 2026, dampening hopes for an extended crypto rally.
Puckrin emphasized that liquidity conditions and the Fed’s balance sheet policy will dominate early 2026.
Historically, low interest rates benefit risk-on assets like Bitcoin, but with only 24.4% of traders expecting another cut at the January 2026 FOMC meeting, markets are bracing for a slower path forward.
Mixed Economic Signals Complicate the Fed’s Path
In his remarks, Powell highlighted that consumer spending and business investment remain “solid” with layoffs still low. Yet inflation remains “somewhat elevated” above the 2% target. The housing sector, meanwhile, continues suffering under tight conditions, described by Powell as “weak.”
Complicating matters further, Powell admitted the Fed is missing months of key economic data due to the US government shutdown, creating unusual uncertainty in determining policy direction.
Trump Eyes Powell’s Replacement - and Wants Rates Slashed
Political pressure is now entering the fold. US President Donald Trump has openly signaled a desire to replace Powell, whose term ends in May 2026. Reports point to Kevin Hassett, former Coinbase advisory council member and current National Economic Council director, as the leading candidate.
Trump has already pushed publicly for aggressive rate cuts under the next chair - a stance that could drastically reshape risk markets, including Bitcoin, depending on the timing.
Markets Prepare for a Long Road Ahead
While the 25 bps cut provides temporary relief, the overarching message from analysts is unmistakable: The real volatility lies ahead, and Bitcoin may need to weather a prolonged period of tight monetary conditions before momentum returns.
With liquidity tightening, political forces stirring, and inflation still resilient, the Fed’s decision marks less of a turning point - and more of a pause before the next act.
