Bitcoin News Update: Investors Shift $7.4 Trillion as Federal Reserve Lowers Rates to Boost Economic Expansion

Monetary policy direction from the U.S. Federal Reserve for 2025 is becoming more predictable, as both analysts and market signals anticipate two more interest rate reductions before the year concludes. Recent trends in inflation, corporate outlooks, and liquidity movements are strengthening the belief that the central bank will lower borrowing costs to support economic growth as momentum slows.

The Fed’s decision in September 2025 to reduce its benchmark rate by 25 basis points, bringing it to a 4.00%-4.25% range, marked a significant move and highlighted a reliance on economic data for future actions. This came after the Bureau of Labor Statistics reported a 12-month inflation rate of 3% in September, slightly higher than the 2.9% recorded the previous year, according to a

. Although inflation is still above the Fed’s 2% goal, weakening labor conditions and sluggish manufacturing figures have intensified demands for further economic support.

Market participants are anticipating between 150 and 200 basis points of rate reductions through 2026, with expectations for another cut in December 2025 already influencing asset valuations, based on a

. The likelihood of lower rates is prompting a $7.4 trillion shift in liquidity from money market funds into riskier investments such as equities and . With money market funds holding $7.39 trillion in assets, yields could fall below 4% as rates decline, encouraging investors to move funds into stocks and bonds. Historical patterns, like the $500 billion migration to risk assets during the 2009 rebound, suggest similar trends could lift market indexes again.

Wall Street’s immediate response has been notable. On October 24, the Dow Jones Industrial Average, S&P 500, and Nasdaq Composite all surged at the open as investors responded to the Fed’s more accommodative stance. Stocks continued to climb on hopes for strong corporate earnings, with major tech firms such as Microsoft and Amazon set to announce results in this environment, according to an

. Even companies facing short-term challenges, like Ford—which lowered its 2025 profit outlook due to supply chain issues—saw their shares rise as investors remained optimistic about long-term recovery, according to .

Bitcoin is also poised to gain. Spot ETF inflows reached $26 billion in 2025, with BlackRock’s IBIT alone drawing $100 billion in assets, as noted in the Coinpaprika analysis. Some analysts believe that if 5% of money market fund assets move into crypto, Bitcoin could reach $280,000-$350,000, though most of the liquidity is expected to flow first into bonds and stocks.

The Fed’s shift in policy is influencing financial systems worldwide. In Japan, the introduction of JPYC, the nation’s first yen-based stablecoin, highlights how both central banks and private companies are adjusting to a lower-rate climate, as reported by

. At the same time, U.S. authorities are examining synthetic stablecoins like Ethena’s , which has challenged USDC’s market share but has also shown vulnerability to volatility, as seen in a recent depegging incident covered by a .

As the Fed prepares for its next steps, investors will pay close attention to the November meeting and the Trump-Xi summit for insights into trade relations and inflation trends. With further rate cuts widely expected, the spotlight turns to capital flows and the search for the next drivers of economic growth.

---