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Bitcoin and Ethereum may be on the verge of a significant rally as the Federal Reserve considers its first Fed rate cut of 2025 this week. Tom Lee, chairman of Ethereum treasury firm BitMine, told CNBC that digital assets could see “monster” gains in the coming months if policymakers move ahead with an expected 25 basis point reduction.
The Fed rate cut decision comes after months of holding borrowing costs steady at 4.25%–4.50%. A move lower would mark the first shift this year, potentially reducing the federal funds rate to 4.00%–4.25%. The timing reflects signs of a cooling labor market — slower job growth and unemployment rising to 4.2% in July — even as inflation remains elevated near 3%.
“Bitcoin and Ethereum are uniquely sensitive to liquidity conditions,” Lee said. “When the Fed delivers a rate cut, history shows these assets can outperform in a big way.” — Tom Lee, Chairman, BitMine.
“Bitcoin and Ethereum are among the standout trades when liquidity expands,” Lee said in his interview, stressing that crypto markets often respond faster than equities or bonds.
The Federal Reserve begins its two-day policy meeting on Tuesday, with a decision scheduled for 2 p.m. ET on Wednesday, September 17. Markets widely expect a 25 basis point Fed rate cut, which would lower the federal funds rate to a range of 4.00%–4.25%. This would be the first reduction of the year after the central bank maintained rates between 4.25% and 4.50% for several months.
The anticipated Fed rate cut reflects growing concerns over the U.S. labor market. Job growth has slowed, and unemployment climbed to 4.2% in July. At the same time, inflation remains stubbornly high at around 3%, with tariffs and other supply-side pressures complicating policymakers’ outlook.
If confirmed, the Fed rate cut would aim to balance these competing risks while signaling the central bank’s readiness to stimulate growth as economic momentum cools.
While most traders expect a modest 25 basis point Fed rate cut, some analysts see a slim chance of a more aggressive 50 basis point move. President Donald Trump has publicly urged the Fed to take bolder action.
“President Trump has openly called for a larger reduction, adding political pressure to the Fed’s deliberations,” the report noted.
Still, markets appear largely aligned with expectations for a smaller cut. Traders surveyed through the CME FedWatch tool overwhelmingly project the 25 basis point shift. Ahead of the decision, global markets have entered a wait-and-see mode, with Asian equities climbing to fresh highs and the U.S. dollar struggling to gain momentum.
Investor optimism surrounding a potential Fed rate cut has already lifted digital assets. Bitcoin was last trading near $115,800, up 3.4% over the past week. Ethereum followed suit, rising 5% to hover around $4,528. Both assets have benefited from anticipation that cheaper liquidity will drive demand for risk assets.
Lee emphasized that while small caps and financial stocks could also benefit from a Fed rate cut, Bitcoin and Ethereum remain uniquely positioned. Their sensitivity to monetary easing and seasonal trading strength make them prime candidates for outsized returns in the coming months.
“Besides tech and crypto, small caps and financial stocks also tend to benefit from rate cuts,” Lee said. “But Bitcoin and Ethereum could be the standout trades given their seasonal strength and sensitivity to monetary easing.”
For crypto investors, the Fed rate cut could mark a pivotal moment after a turbulent summer. The central bank’s decision on Wednesday will not only determine near-term liquidity but could also set the tone for global markets through the end of the year.
Lee’s forecast underscores the growing perception that Bitcoin and Ethereum are at the heart of this potential rally. If the Fed rate cut delivers as expected, digital assets may become the primary beneficiaries of a policy-driven surge in risk appetite.
A clear signal from the Fed could ignite the rally Lee anticipates, placing Bitcoin and Ethereum at the center of an easing-fueled market surge that may extend into 2026.
