Delphi Digital: Learning from history, how do interest rate cuts affect Bitcoin's short-term trends?
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Delphi Digital: Learning from history, how do interest rate cuts affect Bitcoin's short-term trends?
A rate cut could serve as a conditional market trigger, rather than a direct catalyst.
Navigating Web3 tides with focused insightsAuthor: that1618guy, Market Researcher at Delphi Digital
Translation: Yuliya, PANews
The market widely expects the Federal Reserve to begin this cycle's first rate cut in September. Historically, Bitcoin tends to rise ahead of accommodative policy announcements but falls after rate cuts are implemented. However, this pattern does not always hold. This article reviews the situations in 2019, 2020, and 2024 to anticipate potential movements in September 2025.
2019: Rising on Expectations, Falling on Realization
In 2019, Bitcoin rebounded from $3,000 at the end of 2018 to $13,000 by June. The Federal Reserve announced rate cuts on July 31, September 18, and October 30 respectively.
Each rate cut decision marked the exhaustion of Bitcoin’s upward momentum. BTC rose sharply before the FOMC meetings but was sold off afterward as the reality of weakening economic growth reemerged. This suggests that the positive impact of rate cuts had already been priced in, while the underlying reality of slowing growth dominated subsequent price action.
2020: An Exception Due to Emergency Rate Cuts
The situation in March 2020 was not a typical cycle. At that time, the Federal Reserve slashed interest rates to zero in response to panic caused by the COVID-19 pandemic.
During this liquidity crisis, BTC plummeted alongside equities but then staged a strong rebound supported by massive fiscal and monetary stimulus. Therefore, this was a crisis-driven anomaly and cannot serve as a template for predicting trends in 2025.
2024: Narrative Overriding Liquidity
In 2024, the trend shifted. BTC did not decline after rate cuts; instead, it continued its upward trajectory.
The reasons include:
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Trump's campaign turned cryptocurrency into an election issue.
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Spot ETFs are attracting record inflows.
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MicroStrategy's balance sheet-driven buying demand remains strong.
In this context, the importance of liquidity diminished. Structural buying pressure and favorable political developments outweighed traditional economic cycle influences.
September 2025: A Conditional Rally Trigger
The current market environment differs from past cycles characterized by runaway rallies. Since late August, Bitcoin has been consolidating, ETF inflows have significantly slowed, and corporate balance sheet buying—once a consistent bullish factor—has begun to weaken.
This makes the September rate cut a conditional rally trigger rather than a direct catalyst.
If Bitcoin rises sharply ahead of the FOMC meeting, the risk of history repeating increases—that is, traders "sell the news" after the easing policy is confirmed, resulting in a "rally-to-dump" scenario.
However, if prices remain stable or dip slightly before the decision, most excessive positions may have already been cleared, allowing the rate cut to stabilize the market rather than mark the end of upward momentum.
Key Takeaways
Bitcoin’s current price movement may be influenced by the Federal Reserve’s September FOMC meeting and related liquidity changes. Overall, Bitcoin might see a pre-FOMC rally, but the upside could struggle to reach new highs.
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If prices surge significantly before the meeting, a "sell the news" correction is likely;
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But if prices consolidate or decline between early September and the meeting, the rate adjustment could spark an unexpected rally.
Nevertheless, even if a rebound occurs, the market should remain cautious. The next rally may form a lower high (approximately in the $118,000–$120,000 range).
Assuming such a lower high forms, it could set the stage for the second half of Q4, when liquidity conditions may stabilize and demand could rebound, potentially pushing Bitcoin toward new highs.
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