Optimism is rising in the cryptocurrency market amid renewed odds that the Federal Reserve will cut interest rates and halt the shrinking of its balance sheet. Betting markets put a 98% probability on a first cut on October 29, 2025, while major banks like JPMorgan and Goldman Sachs expect the end of Quantitative Tightening (QT) by the fourth quarter of 2025. These changes could redirect significant capital flows toward higher-risk assets such as Bitcoin.
The end of Quantitative Tightening would represent a turning point for cryptocurrencies. Since June 2022, the Fed has reduced its holdings from $8.9 trillion to approximately $6.6 trillion, withdrawing more than $2 trillion from the system. If this drain stops, those funds could flow back into risky assets. An analyst cited in the report describes it as “the most significant event for cryptocurrencies this year.”
Bitcoin is already trading near $115,000-$116,000, with technical analysts viewing a daily close above $116,000 as the trigger for a move toward $120,000-$122,000, with ambitious targets near $150,000-$160,000 and provisional supports around $110,000.
Potential impact on the crypto market
A potential Federal Reserve pivot could trigger a wave of renewed interest across the crypto market. Lower rates would likely drive stronger inflows into cryptocurrency ETFs and institutional investment mandates, as investors seek higher returns in digital assets. This shift could also deepen order books in both spot and derivatives markets, improving liquidity and tightening spreads as major players allocate more capital to the sector.
However, the transition may also bring heightened uncertainty. Any delay in rate cuts could spark short-term volatility, especially among leveraged traders and speculative funds. At the same time, a larger institutional footprint would prompt regulators to reinforce KYC, AML, and custody standards, aiming to balance transparency with market expansion. Overall, the Fed’s next move could redefine both the pace and structure of crypto adoption in traditional finance.
The next focal point will be the Fed meeting on October 29, 2025, when officials will decide on the widely anticipated 25 basis-point cut and could announce the end of QT. That statement will allow institutions to set product timelines, custody capacity, and portfolio weights, potentially consolidating a new bullish phase for Bitcoin and other cryptocurrencies.
