Fed’s 25 vs 50 bp path: implications for Bitcoin and DeFi
The Fed’s split over October cuts is now explicit. Governor Christopher Waller argues for a cautious step, while Stephen Miran pushes for a bolder move – a debate that will shape how quickly policy eases into the year‑end.
After September’s reduction, the policy rate sits at 4.00%-4.25%. Chair Jerome Powell has signaled another quarter‑point cut is likely at the Oct. 28-29 meeting as hiring cools, with inflation still running above 2%.
Waller frames the playbook as patient easing: do 25, wait for data, then decide the next step. “Go cautiously… do 25, wait and see,” he said on Bloomberg Television.
Miran urges a faster reset of policy tightness given trade‑shock risks: “If policy stays this restrictive, a shock does more damage… I’d favor 50 bp (0.50 percentage point) now,” he told Fox Business. He still expects the committee will deliver 25 bp, and sees room for “three 25s” this year.
In crypto markets, the key levers are real yields and the dollar (DXY). Softer policy tends to pull real yields and the DXY lower, easing financial conditions: risk appetite improves, BTC and altcoins tend to rally. Tighter conditions do the reverse.
DeFi and stablecoin yields adjust too. As front‑end rates drift down, yields on T‑bill-backed stablecoin products shrink; capital may rotate into longer‑dated or riskier assets. For miners and layer‑2 and Zero‑Knowledge (ZK) networks, cheaper credit marginally helps capital spending and refinancing, but any trade or growth shock can tighten financing again just as quickly.
The base case for October is -25 bp (0.25 pp), with language that leaves December open. A larger -50 would be a surprise and likely hit real yields and the dollar more sharply, boosting crypto beta – if inflation expectations stay anchored.
On decision day, moves in real yields, the DXY (U.S. dollar index), and flows into Bitcoin ETFs will show whether easier policy is reaching crypto liquidity without adding new macro risk.
