Crypto Market Eyes Fed’s Rate Cut Amid $7.2 Trillion Liquidity Shift

- Fed expected to cut rates in pivotal crypto moment - Political turmoil raises concerns over central bank independence On September 16, 2025 (UTC), Cointelegraph reported that the U.S. Federal Reserve is anticipated to announce an interest rate cut on September 17. This decision could create a favorable environment for high-risk assets, including cryptocurrencies. This expected policy shift comes amid heightened political tensions surrounding the Federal Reserve’s governance and leadership. The Trump administration reportedly took steps to remove Fed governor Lisa Cook over allegations of mortgage fraud. However, a federal appeals court in Washington blocked this effort, allowing Cook to retain her position while litigation unfolds. Meanwhile, the Senate confirmed Stephen Miran, a White House economic adviser with pro-cryptocurrency views, to the Federal Reserve board for a term ending in January 2026. These developments have prompted concerns among Democratic lawmakers regarding the increasing political influence over the Fed’s monetary policies. An interest rate cut typically benefits high-risk assets as lower bond yields drive liquidity toward alternative investment options. Kevin Rusher, founder of RAAC, highlighted this effect. He noted that “markets are on edge” and that an interest rate reduction could “unlock the $7.2 trillion sitting in money market funds.” Market analysts have identified cryptocurrency sectors positioned to gain from this move. Alice Liu, research lead at CoinMarketCap, explained that Layer-1 ecosystems such as Ethereum and Solana are particularly sensitive to changes in liquidity and investor risk appetite. Additionally, she noted that decentralized finance (DeFi) tokens become “relatively more attractive” in lower interest rate environments. Bitcoin, although less reliant on interest-rate changes, remains influenced by broader monetary policy developments and could see volatility following the Fed’s announcement. Looking at historical trends, The Kobeissi Letter, a well-regarded market analysis publication, noted that the S&P 500 has historically performed well in the 12 months following a Federal Reserve rate cut. This is especially true when markets approach all-time highs. The publication suggested similar patterns could emerge for alternative assets like gold and Bitcoin. However, short-term turbulence could accompany the initial announcement. As of September 16, 16:00 UTC, Ethereum (ETH) is trading at $1,731, with a 4.7% increase in 24-hour trading volume, according to CoinMarketCap. Solana (SOL) is valued at $21.03, reflecting a 5.4% increase in the same period. Bitcoin (BTC) remains steady, trading at $27,615 with a 1.2% increase in 24-hour volume. These figures underline the cautious optimism across the cryptocurrency market ahead of the Federal Reserve’s anticipated rate cut decision.