If the Federal Reserve proceeds with another interest rate cut during the upcoming FOMC meeting on October 29, the cryptocurrency market—particularly Bitcoin (BTC), Ethereum (ETH), and Dogecoin (DOGE)—is poised for a potentially volatile reaction. Historically, rate cuts tend to buoy risk-on assets like cryptocurrencies, but analysts warn that this time the impact may be more muted.
According to crypto strategist Bull Theory, financial markets have already priced in a 25 basis point reduction. As a result, the immediate effect on Bitcoin, Ethereum, and Dogecoin prices may be limited unless the Fed introduces additional unexpected monetary shifts. One such possibility is an official pause or end to the Fed’s ongoing policy of quantitative tightening—a process through which the central bank reduces liquidity by shrinking its balance sheet.
Bull Theory argues that a decisive pivot away from liquidity restrictions could be a pivotal moment for the crypto market. A cessation of quantitative tightening would signal a more supportive monetary stance, potentially setting the stage for the next crypto bull cycle. He emphasized that historically, major market rallies begin when central banks subtly transition from restrictive to accommodative policies.
Federal Reserve Chair Jerome Powell has already alluded to this shift. During his address at the National Association for Business Economics, Powell suggested that quantitative tightening could conclude in the near future. Should he reinforce this message during the October FOMC meeting, it could serve as a bullish signal for digital assets.
Additionally, speculation is growing around the possibility of a larger rate cut. While the consensus points to a 25 basis point reduction, some market observers, like analyst Ted Pillows, believe a more aggressive 50 basis point cut could spark a stronger rally. However, Pillows remains cautious, stating that although there’s been modest upward movement in Bitcoin, Ethereum, and Dogecoin, the momentum lacks the conviction needed for a sustained breakout.
Beyond the Fed’s monetary policy, several external factors could influence crypto prices this week. The upcoming earnings reports from major tech giants—Microsoft, Alphabet, Meta, Apple, and Amazon—could inject fresh volatility into the market. Known collectively as the “Magnificent Seven,” strong results from these companies could reaffirm investor confidence and drive capital into high-risk assets, including cryptocurrencies.
Geopolitical developments are also in focus. U.S. President Donald Trump is scheduled to meet Chinese President Xi Jinping at the APEC summit on October 30. The meeting is expected to center around trade negotiations. Prior statements from U.S. Treasury Secretary Scott Bessent reveal that both sides have reached a preliminary framework to guide discussions. This progress has already provided a boost to crypto prices, hinting that traders are anticipating a positive outcome.
Standard Chartered analyst Geoffrey Kendrick believes that if current macroeconomic and geopolitical developments unfold favorably, Bitcoin could establish a new price floor and never return below $100,000. Although such projections are speculative, they underscore the growing influence of global economic policy on digital asset valuations.
In the broader context, rate cuts generally reduce yields on traditional savings and fixed-income investments, pushing investors to seek higher returns elsewhere. This often channels capital into equities, real estate, and more recently, cryptocurrencies. As such, a dovish Federal Reserve could catalyze a fresh wave of institutional and retail investment into the crypto space.
However, it’s important to note that crypto markets are notoriously reactive and can price in expected news well in advance. This means that even if the Fed does cut rates, the actual announcement may result in a “buy the rumor, sell the news” event, where prices briefly surge before pulling back.
Investors should also be mindful of inflation. If the Fed loosens monetary policy too aggressively, inflation expectations could rise again, complicating future decisions. A resurgence in inflation could force the Fed to reverse course, which would introduce additional uncertainty into the crypto markets.
Another key factor to consider is stablecoin liquidity. In recent months, inflows of stablecoins like USDT and USDC onto exchanges have often preceded crypto rallies, signaling growing buying power. If a rate cut prompts stablecoin reserves to increase, it could provide the fuel for a sustained upward move in Bitcoin, Ethereum, and Dogecoin.
Market sentiment remains cautiously optimistic. While the macroeconomic environment appears increasingly favorable for digital assets, many traders are waiting for more definitive signals before taking on additional risk. Until then, price action is likely to remain choppy, with crypto assets hovering near key technical levels.
Lastly, long-term investors may view the current macro backdrop as an opportunity to accumulate positions ahead of a potential bull run. If the Fed commits to a series of rate cuts and ends quantitative tightening, it could mark the beginning of a prolonged period of liquidity-driven growth for the crypto sector.
In summary, while a single rate cut may not be enough to ignite a massive rally, the combination of dovish central bank policy, improving tech sector fundamentals, and easing geopolitical tensions could collectively create the conditions for a significant move in Bitcoin, Ethereum, and Dogecoin prices over the coming weeks.