What happened?
In 2025, Bitcoin experienced a slight dip to $114,700 but quickly rebounded to $116,600 after the Federal Reserve cut its benchmark rate by 25 basis points to between 4.00% and 4.25%, due to slowing job growth and rising economic risks. Markets viewed this reduction as positive for risk assets such as Bitcoin, which became more attractive compared to traditional safe havens like bonds due to the lower rates.
Who does this affect?
The price fluctuation of Bitcoin principally impacts investors, both individual and institutional, who have stakes in the cryptocurrency market. It also affects the mining industry. Bit Digital CEO Sam Tabar warned that private miners might struggle to remain profitable after the next halving, and posited that state-backed entities could take over mining dominance due to their access to cheaper or even free electricity.
Why does this matter?
The Federal Reserve’s decision to cut rates impacts the market by making non-yielding assets like Bitcoin more appealing. Lower returns on traditional safe havens push investors towards riskier assets that promise higher yields. Furthermore, potential shifts in the Bitcoin mining industry, from private to state-backed operations, could fundamentally change the power distribution within the industry, thus impacting the overall market dynamics.