Bitcoin has surged after the Federal Reserve’s initial interest rate cut of 2025, with market expectations soaring as the “floodgates start to open.” The bitcoin price reached $118,000 per bitcoin after the Fed’s announcement, only to dip slightly afterward, while the total crypto market approached its all-time high of $4.2 trillion, edging closer to creating the new “Rockefellers or Rothschilds.”
In a significant development, a new secret weapon has emerged in President Donald Trump’s ongoing battle against the Fed, prompting the bitcoin price and the broader crypto market to prepare for a potential clash with a staggering $9.5 trillion “wall of cash.” Federal Reserve chair Jerome Powell has made the decision to cut interest rates for the first time this year, paving the way for a potential influx of cash into risk assets such as bitcoin and crypto. Following this announcement, the price of bitcoin has seen an upward movement. According to analysts, a staggering $7 trillion “wall of cash” currently parked in money market funds and other high-yield savings accounts—thanks to elevated interest rates in recent years—might soon shift towards higher-risk assets such as bitcoin and crypto.
“Roughly $7.2 trillion to $7.5 trillion remains parked in money market funds whose yields will now begin to fall, creating a powerful incentive for capital to move back into equities and alternatives like crypto,” Matt Mena. “Alongside that, more than $2 trillion sits in fixed income ETFs, another pool of capital that will also begin seeking higher returns now that the Fed has entered a cutting cycle.” Both cash parked in money market funds and fixed income allocations are set to shift into risk assets such as bitcoin as yields compress. The anticipated interest rate cut has injected new life into the bitcoin and crypto market, igniting hopes that the bitcoin price rally will pick up momentum once again after its pause in July. “Jerome Powell’s rate cut has injected fresh momentum into bitcoin, which has spent months knocking on the door of $118,000. With borrowing now cheaper, investors are chasing higher-yield opportunities,” said Dom Harz. The Fed announced that two more rate cuts are anticipated by year-end, as worries about a declining labor market take precedence over concerns that inflation might resurface.
Investors are placing their bets on two additional quarter-point cuts in October and December, which could bring the funds rate down to a range of 3.5% to 3.75% by year-end. “The Fed’s 25-basis-point cut aligns with market expectations and could reinforce bitcoin’s role as a liquidity barometer,” stated CJ Burnett. “Continued easing at upcoming meetings may support bitcoin’s momentum as global liquidity expands and investors seek assets that cannot be debased.”