The Fed cuts interest rates by 25 basis points, pressure from Trump intensifies, gold hits a historic high while Bitcoin remains calm.

The Fed lowered interest rates by 0.25% as the market expected, bringing the target range for the federal funds rate down to 4.00%–4.25%. Despite significant downward revisions to employment data and intensifying signs of economic slowdown, the crypto market showed almost no response, with Bitcoin stable at $116,000 and Ether hovering around $4,500. Gold, on the other hand, reached a historic high of $3,730, reflecting a rise in risk aversion.

Economic Data and Rate Cut Pressure

The U.S. Department of Labor's revised data shows that the number of new jobs added over the past year is 911,000 less than previously reported, directly undermining the claim of a "strong labor market." Coupled with weak economic growth and market unease, the Fed is forced to take action. Although the inflation rate remains at 2.9%, above the 2% target, the central bank is struggling to maintain a balance between employment and prices. The new board member, Trump's nominee Stephen Miran, even advocates for a one-time rate cut of 50 basis points, demonstrating the strong pressure from Trump's camp.

Bitcoin and Ethereum's Tepid Response

After the interest rate cut decision was announced, the crypto market hardly fluctuated. Bitcoin fluctuated slightly around $116,000, while Ethereum remained at $4,501. This is because the market had already priced in the expectation of a rate cut, with the CME FedWatch tool indicating a 96% probability of a cut before the meeting. Investors are more focused on the Fed's dot plot and Powell's speech, especially signals of possibly two more rate cuts within the year.

Trump and the Fed Game

The political gamesmanship behind this rate cut is quite pronounced. Trump has long criticized the Fed for being slow to act and even attempted to replace some board members to push for a more "dovish" stance. Although he successfully arranged for Miran to join, his attempt to remove board member Lisa Cook was rejected by a federal court, highlighting the tension between the White House and the Fed.

Comparison between Gold and the Crypto Market

The risk aversion sentiment is more pronounced in traditional asset markets. Gold surged to a historical high of $3730 within a week, with a monthly increase of over 10%. In contrast, Bitcoin, as the "digital gold," has not garnered much favor from funds, at least underperforming expectations in the short term.

Outlook: The Real Test After Rate Cuts

The recent interest rate cut has long been digested by the market, and the short-term market reaction is muted. However, the key in the future lies in: whether the Fed releases stronger easing signals, whether Trump continues to exert pressure, and whether Bitcoin can gradually take on the role of "digital gold" in an uncertain environment.

Conclusion:

The Fed's interest rate cut, while expected, highlights the dual dilemma of weakening U.S. economic data and political pressure. The historic high of gold indicates that risk-averse sentiment is rising, and whether Bitcoin can gradually demonstrate its value as a safe haven and hedge against inflation during the subsequent rate cut cycle will become the biggest focus in the crypto market.