Bitcoin has climbed following the Federal Reserve’s first interest rate cut of 2025, with market expectations sky high as the “floodgates start to open.”
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The bitcoin price touched $118,000 per bitcoin following the Fed’s announcement before dropping back slightly, with the combined crypto market nearing its all-time high of $4.2 trillion (and coming closer to minting the new “Rockefellers or Rothschilds”).
Now, as a new secret weapon is revealed in president Donald Trump’s war on the Fed, the bitcoin price and crypto market is braced for collision with a $9.5 trillion “wall of cash.”
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Federal Reserve chair Jerome Powell has cut interest rates for the first time this year, opening up the door to a flood of cash hitting risk assets like bitcoin and crypto, with the bitcoin price climbing on the news.
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A $7 trillion “wall of cash” that’s currently sitting in money market funds and other high-yield savings accounts that have benefited from higher interest rates in recent years could now begin moving into higher-risk assets like bitcoin and crypto, according to some hopeful crypto analysts.
“Roughly $7.2 trillion to $7.5 trillion remains parked in money market funds whose yields will now begin to fall, creating a powerful incentive for capital to move back into equities and alternatives like crypto,” Matt Mena, crypto research strategist at 21Shares said in emailed comments.
“Alongside that, more than $2 trillion sits in fixed income ETFs [exchange-traded funds], another pool of capital that will also begin seeking higher returns now that the Fed has entered a cutting cycle. Both cash parked in money market funds and fixed income allocations are positioned to rotate into risk assets like bitcoin as yields compress.”
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The bitcoin price has rebounded from its recent lows, climbing as the Federal Reserve cuts interest rates for the first time in 2025.
Forbes Digital Assets
The well-telegraphed interest rate cut has revitalized the bitcoin and crypto market, setting alight expectations that the bitcoin price rally will now resume.
“Jerome Powell’s rate cut has injected fresh momentum into bitcoin, which has spent months knocking on the door of $118,000. With borrowing now cheaper, investors are chasing higher-yield opportunities,” Dom Harz, cofounder of bitcoin decentralized finance (DeFi) platform BOB, said via email.
The Fed said two additional rate cuts are expected by the end of the year, with concerns over the weakening labor market outweighing fears that inflation could make a come back.
Investors are betting on two more quarter-point cuts in October and December, potentially lowering the funds rate to between 3.5% and 3.75% by the end of the year, according to CME’s FedWatch tool.
“The Fed’s 25-basis-point cut aligns with market expectations and could reinforce bitcoin’s role as a liquidity barometer,” CJ Burnett, chief revenue officer at U.S.-based bitcoin mining hosting company Compass, said in emailed comments. “Continued easing at upcoming meetings may support bitcoin’s momentum as global liquidity expands and investors seek assets that cannot be debased.”