Bitcoin volatility spikes as FOMC confirms 25 basis-point rate cut for September

Bitcoin (BTC) whipsawed on Sept. 17 after the Federal Reserve confirmed a 25 basis-point interest rate cut, lowering its target range for the federal funds rate to 4% to 4.25%.

The decision also reduced the interest rate paid on reserve balances to 4.15% and lowered the primary credit rate to 4.25%, both effective Sept. 18.

The Fed said the New York Fed’s Open Market Desk will conduct open market operations to maintain the new range, including up to $500 billion in overnight repurchase agreements and a $160 billion per-counterparty daily limit on reverse repos.

Based on CryptoSlate data, Bitcoin surged to an intraday high of $116,318 ahead of the statement before sharply reversing to $114,820 as traders “sold the news.”

The decline was violent but short-lived, with Bitcoin recovering to $115,639 as of press time.

The rapid swings emphasize how digital assets remain highly sensitive to changes in dollar liquidity and Fed policy.

The rate cut was widely anticipated but marked the Fed’s first policy adjustment in months after keeping borrowing costs elevated. Markets had priced in the decision, though the speed of Bitcoin’s reaction highlighted how traders are positioning around shifts in monetary conditions.

Investors are now awaiting Chair Jerome Powell’s press conference later for further guidance on whether the central bank could deliver additional cuts before year-end.

Stocks also saw volatility after the announcement, while Treasury yields edged lower as bond markets priced in looser financial conditions. Bitcoin’s exaggerated moves mirrored broader risk sentiment but with sharper intraday swings.