BTC price fluctuates ahead of expected Fed rate cut

The Fed could opt for a 25bps cut considering Tuesday’s better-than-expected US retail sales data, industry executive argues

article-image

ddRender/Shutterstock modified by Blockworks

share

Just hours away from the Federal Reserve’s expected rate reduction from its current 5.25%-5.50% range, the question remains whether the cut will amount to 25 basis points or 50bps.

The Federal Open Market Committee (FOMC) is set to release a statement at 2 pm ET before Fed Chair Jerome Powell’s press conference at 2:30 pm ET.  

One of the final data points to look at before the central bank’s decision was US retail sales for August. 

The Census Bureau’s report Tuesday morning showed these sales slightly rose last month — amounting to a month-over-month increase of 0.1%. The increase was a bit unexpected, as economists polled by Reuters had estimated a 0.2% decline.

21Shares research analyst Leena ElDeeb noted the retail sales “beating expectations” were well-received by the market, “alleviating recession fears for now.”

Bitcoin’s price rose toward $61,000 by Tuesday afternoon — a level nearly 5% higher than 24 hours prior. BTC dropped closer to the $59,000 level early Wednesday before again increasing to about $59,800 at 9:30 am ET.

Off The Chain Capital CEO Brian Dixon told Blockworks the better-than-expected retail sales numbers could pressure the Fed to cut rates by only 25bps, “as the economy is still somewhat strong but clearly showing signs of slowing.” 

Read more: What to watch for heading into the next Fed rate decision

The probability of the Fed cutting rates by 50bps stood at 59% at 9:30 am ET Wednesday, according to CME Group’s FedWatch tool.

This chance of a 50bps cut has fluctuated in recent days after jumping markedly higher late last week. Before that, the markets viewed a 25bps cut as more likely.

A 50bps cut could spark investor fears of a recession and potentially increase volatility, some industry analysts and executives have noted.

“I think the overall data picture shows that the Fed is probably thinking that it might be better to gradually taper down rates rather than initiate cuts in a big way,” Dixon added.

Such a gradual drop would go against the wishes of three Democratic senators who urged the Fed (in a Monday letter to Powell) to cut rates by 0.75% at the September meeting. 

Front-loading rate cuts could help the US economy “avoid sliding towards a potential crisis,” Sens. Elizabeth Warren, Sheldon Whitehouse and John Hickenlooper wrote.

A number of analysts have said the market is pricing in 100bps in rate reductions by the end of the year.

“Obviously, even as inflation has eased, there’s certainly concern that it could return if overall monetary loosening takes place in a fashion that is too big and too fast,” Dixon said.

A modified version of this article first appeared in yesterday’s On the Margin newsletter. Subscribe here so you don’t miss tomorrow’s edition.


Get the news in your inbox. Explore Blockworks newsletters:

Tags

Decoding crypto and the markets. Daily, with Byron Gilliam.

Upcoming Events

Old Billingsgate

Mon - Wed, October 13 - 15, 2025

Blockworks’ Digital Asset Summit (DAS) will feature conversations between the builders, allocators, and legislators who will shape the trajectory of the digital asset ecosystem in the US and abroad.

recent research

Research Report Templates.png

Research

Content Delivery Networks (CDNs) represent low-hanging fruit in a massive market ripe for Web3-driven disruption. The global CDN market was valued at ~$28B in 2024, and is projected to surpass $140B by 2034, (18.75% CAGR) underscoring the immense demand for efficient content delivery.

article-image

As Satoshi-era wallets saw over $8 billion worth of BTC on the move, Congress is gearing up for “Crypto Week”

article-image

Bitcoin’s runaway success was partly driven by Slashdot

article-image

Blockworks Research data shows that VC spending is back on the rise after a slow May

article-image

After rejecting a bid from the AI cloud-computing startup last year, Core Scientific agreed to be acquired in a deal expected to close by Q4 2025

article-image

Sponsored

Plume’s collaboration with TRON will unlock cross-chain RWA yield for one of the world’s largest blockchain ecosystems

article-image

Who needs gold when you have taxes?