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Investors were on the edge of their seats this week for the Fed decision. The U.S. central bank did lower interest rates. However, anyone counting on an automatic year-end rally might be disappointed. According to an analyst, this move is primarily an intervention to keep the financial system stable, not to give markets an extra push.
Unrest Within the Fed #
The Fed lowered rates again during the FOMC meeting last Wednesday. Positive news, as lower rates make saving less attractive and investing more appealing. Yet, there’s an important nuance: disagreement within the Fed. Some policymakers worry about inflation, while others are concerned about a weakening economy and labor market. Due to this division, the Fed is hesitant about further support measures.
The Fed is also buying short-term U.S. Treasury bonds again—about $40 billion this month. That sounds substantial, but some crypto analysts say the effect is limited. The measure is mainly intended to keep the banking system running smoothly, not to stimulate the economy or financial markets.
Why Does This Barely Help Crypto? #
In the past, easy money policy led to big rallies in stock and crypto markets. The year 2021, when a crypto rally occurred, is a good example. Back then, a lot of new money became available and found its way to risky investments.
Whether a year-end rally will happen this year is questionable. The situation in 2025 is different from 2021. The Fed emphasizes that its actions are purely technical and not meant to give investment prices a boost.
This is reflected in other markets too. Long-term rates remain relatively high, meaning borrowing stays expensive. This makes investors more cautious with risky investments, which isn’t good news for cryptocurrencies like bitcoin, ethereum, and XRP.
Will There Be a Crypto Rally at the End of This Year? #
Traders in the crypto options market are cautious. Long-term expectations for bitcoin and ethereum aren’t clearly positive due to the lack of extra money for risky investments. Rallies are seen as temporary speculative moves, not the start of a new strong trend.
Additionally, the expected return on crypto is becoming less different from that on safe government bonds. For large players, crypto is therefore less attractive than before.
A classic year-end rally isn’t ruled out, but it is unlikely. Without strong support from the Fed, there’s no solid foundation for price explosions. For now, caution dominates the crypto market instead of optimism. Many crypto investors are currently focusing on risk management rather than quick profits.