FOMC Meeting: How Will the Federal Reserve’s September Rate Reduction Impact BTC?

The Federal Reserve has once again taken the spotlight as today’s Federal Open Crypto market Committee (FOMC) meeting may lead to the initial rate reduction of 2025, with traders keenly observing the implications for Bitcoin’s valuation.

The markets are largely anticipating a rate decrease at this week’s FOMC gathering.

According to CME’s FedWatch tool, there is a 96% chance that the Fed will lower its benchmark interest rate by 25 basis points.

There remains a modest, 4% likelihood that officials might opt for a more substantial 50-basis-point cut.

(Source – CME Group)

The Fed maintained interest rates at 5.5% for an extended period, remaining unchanged from July 2023 until August 2024.

Rate cuts commenced in August and continued through December, decreasing the rate to 4.5%. Since then, the policy has remained steady.

(Source – Trading Economics)

Polymarkets predicts a 91% likelihood of a 0.25% reduction, a 7% chance of a 0.5% cut, and a mere 3% chance of no adjustment. Essentially, investors are nearly convinced that September will signal the Fed’s first rate change of the year.

(Source – Polymarket)

What was Bitcoin Response to Previous Rate Cut?

The Federal Reserve’s last cycle of rate cuts significantly affected Bitcoin’s price. The announcement of the reduction coincided with the asset bottoming out in September 2024, which subsequently sparked a rally that has defined the market since.

BTC has since doubled in value. Significant profits were realized during a brief span from September to December 2024, underscoring the strong connection between the central bank’s monetary policy and the cryptocurrency’s performance.

The market’s initial reaction to the Fed’s decision was mixed. On September 19, 2024, the central bank made a surprise cut of half a point, leaving investors in a state of shock.

Despite this unexpected action, Bitcoin only posted a modest +1% gain by the end of the day.

Following this, momentum lasted for a week before waning. The price retreated towards pre-announcement levels, eventually resuming its larger upward trajectory in the subsequent weeks.
Later reductions proved to have a more consistent effect. Actions on November 7 and December 17 propelled BTC to new peaks.

Analysts caution that the November rally was not solely attributable to rate changes, as it also coincided with Donald Trump’s election victory, which contributed to the upward pressure.

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Bitcoin Price Prediction: How Can the FOMC Decision Impact Bitcoin’s Next Move?

Crypto analyst Daan Crypto shared a short-term chart for BTC, highlighting typical stop hunts leading up to the FOMC decision.

$BTC Initiating low timeframe stop hunts of overleveraged positions attempting to pre-position into FOMC. pic.twitter.com/JAvnM9Nryf

— Daan Crypto Trades (@DaanCrypto) September 17, 2025

In the 1-minute BTC/USDT perpetual market, prices fluctuated in both directions, often catching traders who are overly leveraged ahead of significant macro announcement.

BTC largely traded within a narrow range of $115,350-$116,200 during the session. A rapid surge above $116,200 triggered stop losses, but quickly receded, lowering the price back to around $115,900 within moments. This rejection indicates available volume was taken above resistance before sellers re-entered.

On the downside, $115,350 served as short-term base level. A swift drop into that level attracted buying interest, leading to a price rebound.

(Source – X)

This sequence flushes the lows and then runs the highs aligns with a classic liquidity sweep intended to clear out positions and reset order flow.

Volume corroborated this narrative. Activity spiked on the move above $116,200, indicating that stop losses were triggered. However, the absence of follow-through revealed it was merely a liquidity grab, not a genuine breakout.

The structure remains within a range. Lower intraday highs during the surge indicate sellers are pressuring barrier level.

Buyers persist in defending near $115,350. Until one side achieves a decisive break, anticipate further incursions into clear available volume zones.

Traders are positioning themselves for the FOMC, where a rate cut is anticipated. This uncertainty is creating short-term fluctuations as participants hedge and, at times, overextend themselves.

Analysts highlight the rapid sweeps as intentional stop hunts targeting crowded positions.

A consistent close above $116,200 would signify a shift in momentum and open up higher potential. Conversely, a breakdown below $115,350 could jeopardize the range and introduce further selling pressure.

Until that happens, expect a volatile environment as the market shakes out weaker positions while awaiting the Fed’s decision.

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