Original | Odaily Planet Daily ( @OdailyChina )

By Golem ( @web3_golem )

"Good afternoon" was the opening greeting from Federal Reserve Chairman Powell at 2:30 AM on September 18th, following the announcement of a 25 basis point interest rate cut. While this was inconsistent with market experience and presented a dovish tone, the market did not see a significant upward trend. (Note: Based on market analysis from previous press conferences, if Powell's opening greeting is "Good afternoon," it signals a hawkish tone and could lead to a market decline; if it is "Hello everyone," it signals a dovish tone and could lead to a market rise.)

After the announcement of the Federal Reserve's decision, spot gold hit a record high of $3,704 per ounce; however, the U.S. stock market saw mixed gains and losses, with the Dow Jones Industrial Average closing up 0.57%, the Nasdaq down 0.33%, and the S&P 500 down 0.10%; the overall crypto market saw a slight increase, but the increase was not large, with BTC up 1.07% in 24 hours, ETH up 2.66% in 24 hours, SOL up 5.5% in 24 hours, and DOGE up 6.2% in 24 hours.

This rate cut, the first by the Federal Reserve since December 2024, met market expectations, but global markets reacted with a lukewarm response. Powell's speech at Jackson Hole in August had already signaled the possibility of a rate cut, prompting the market to buy in. The market's reaction to the rate cut was to buy the anticipation and sell the reality. However, the announcement of a 25 basis point rate cut was insufficient to satiate market appetite. Markets were more concerned about the Fed's policy for the remainder of 2025, with key questions such as "whether this will be the first in a series of rate cuts" and "how many cuts there will be this year" becoming key concerns.

There is still no clear signal on how many times interest rates will be cut this year

During the Q&A session following the rate announcement, Powell stated that "today's easing action can be considered a risk-management rate cut." This represents the Fed's prioritization of addressing employment issues amidst the dilemma of a weak labor market and under-controlled inflation. This decision is based on the Fed's belief that tariffs will have only a one-time impact on inflation, leading to only a short-term increase in prices .

But this year is still a special moment for the Federal Reserve, as it is usually characterized by a weak labor market and rising inflation. This extremely rare economic situation has naturally led to a rare increase in the divergence in the Federal Reserve's interest rate forecasts.

The Federal Reserve's dot plot is a specialized chart used by the Federal Reserve to display future interest rate expectations. It directly reflects both disagreement and consensus within the Fed regarding the future direction of interest rates. The dot plot, released on September 18th, shows that among 19 Fed officials, one believes there will be no rate cuts in 2025; six believe there should be a cumulative 25 basis point rate cut in 2025, representing one rate cut; two believe there should be a cumulative 50 basis point rate cut in 2025, representing two rate cuts; and nine believe there should be a cumulative 75 basis point rate cut in 2025, representing three rate cuts. One official (most likely Milan) believes there should be a substantial 150 basis point rate cut in 2025, suggesting at least two more significant rate cuts (75 basis points + 50 basis points) this year.

The dot plot shows that compared to June (when seven members predicted no rate cuts in 2025), a rate cut is now essentially a consensus within the Federal Reserve, differing only in the magnitude of the reduction. While the Fed's median forecast suggests another 50 basis point rate cut in 2025, which would typically signal a looser market environment and a rally in both US stocks and crypto markets, Powell stated during the Q&A session that there is limited support within the FOMC for a 50 basis point rate cut .

The FOMC meeting concluded that the inflation increase caused by tariffs is only temporary, but Powell also suggested another possibility: if the inflationary impact is more persistent, the Fed's responsibility will be to ensure that the current one-off price increase does not evolve into a sustained inflationary problem. This has left the market with further uncertainty.

Attitudes of market participants

Market participants also have different interpretations of Powell's speech.

George Goncalves, head of U.S. macro strategy at Mitsubishi UFJ, believes that while the Fed has restarted its rate-cutting process, it hasn't entered a cut-throat mode. "This Fed decision is the most dovish it could be, and they've added another rate cut this year to their dot plot projections. However, it doesn't feel like the Fed has entered a cut-throat mode; they've simply restarted the process because they acknowledge the job market isn't as strong as they had hoped."

Michael Rosen, chief investment officer at Angeles Investments, said: "Powell has cooled the market's initial expectations of a more aggressive path of monetary policy easing. He acknowledged the slack in the labor market but stressed that a larger rate cut would only be considered if a more severe situation emerged, which is not currently apparent."

Some investors also firmly believe that the Federal Reserve will cut interest rates significantly in the rest of 2025. Nomura Securities expects the US Federal Reserve to cut interest rates by 25 basis points each in October and December, compared with the previous forecast of a rate cut in December. It also expects the Federal Reserve to cut interest rates by 25 basis points each in March, June and September 2026.

CITIC Securities still expects the Federal Reserve to cut interest rates by another 25 basis points at its October and December meetings, but the interest rate path in 2026 will only become clearer after the final candidate for the new Federal Reserve chairman is decided.

Crypto market participants are generally optimistic

Crypto market participants are generally optimistic. BitMine Chairman Tom Lee said in an interview with CNBC two days ago that after the Federal Reserve's interest rate cut, Bitcoin and Ethereum may see a significant increase in the next three months.

On-chain whales are also voting with their feet, favoring ETH. According to Lookonchain monitoring, after the Federal Reserve cut interest rates by 25 basis points, an OTC whale (0 xd 8 d 0...c 39 d) spent 112.34 million USDC to buy 25,000 ETH at $4,493.

Meanwhile, a whale/institution (0 x 2 aA...dDa 2), which profited $74.92 million through ETH trading, used 80.77 million USDC to purchase 18,000 ETH through Wintermute at an average price of $4,487 early this morning. This address currently holds 530 million USDC and 25,000 ETH, valued at approximately $114 million.