🔹 What the Fed just did — and why investors are paying attention
• On December 10, 2025, the Fed cut interest rates by an additional 0.25 percentage points (this is the third consecutive cut this year), bringing the federal funds rate to about 3.5% – 3.75%.
• At the same time, the Fed announced it would inject liquidity back into the system by purchasing short-term Treasury bonds to stabilize the market and ensure sufficient reserves.
• This decision comes amid concerns about slowing economic growth, a weakening labor market, and inflation being closely monitored.
👉 In summary: The Fed is easing monetary policy to stimulate the economy — this could change global cash flows, including the “risk-on” capital flowing into crypto.
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💡 Why cutting interest rates could push money into crypto
For the risky asset market — like crypto — there are several mechanisms that make the Fed's interest rate cuts “attractive”:
• Low interest rates reduce borrowing costs, increasing overall liquidity in the system. When yields from safe assets (like bonds, USD savings, etc.) decrease, investors tend to seek higher-yielding, riskier assets — like cryptocurrencies.
• The USD may weaken following interest rate cuts — which makes crypto (often priced in USD) appear “cheaper” in exchange rates, increasing its appeal.
• Furthermore, when interest rates are low and liquidity is abundant, investment funds and financial institutions are likely to pour capital into risky assets — including crypto.
In other words: rate cuts —> liquidity increases —> capital seeks “high-risk, high-reward” —> crypto benefits.
