Bitcoin price rallies above $117K as first 2025 Fed rate cut boosts sentiment

Bitcoin price climbed back above $117,000 after the Federal Reserve announced its first interest rate cut of the year, sparking renewed optimism across risk assets. 

At press time, BTC was trading at $117,476, up 0.9% on the day and 3% over the past week. Bitcoin’s 24-hour spot trading volume surged 49.6% to $60.9 billion, indicating renewed participation after a quiet September. 

Derivatives markets saw even stronger activity. Bitcoin (BTC) futures volume jumped 65.9% to $119.8 billion, while open interest rose 1.6% to $85.7 billion, according to Coinglass data. 

Growing open interest combined with rising volume indicates that traders are taking on new leveraged positions rather than just exiting old ones. Larger directional moves are often preceded by this combination, suggesting higher volatility in the days to come.

Fed rate cut improves liquidity outlook

The Federal Open Market Committee voted 11-1 on Sept. 17 to lower the federal funds rate by 25 basis points to a 4.00%–4.25% range. This marks the first reduction since December 2024, driven largely by rising unemployment, which hit 4.3% in August, the highest since 2021.

Chairman Jerome Powell referred to the action as “risk management,” indicating that employment concerns now outweigh inflation risks, even though inflation remained above target (headline CPI at 2.9% and core at 3.1%). The cut weakened the U.S. dollar, lifted equities, and pushed crypto markets higher. 

Commenting on the impact on digital assets, Andrew Forson, President of DeFi Technologies, told crypto.news:

“There will be continued inflows into innovation and tech-related businesses since the returns they stand to offer will be considerably higher than less risky government-backed fixed income instruments, whose return profiles will be reduced.”

Forson also noted that staking-focused digital asset projects are becoming increasingly attractive compared to traditional fixed-income instruments, as they offer both yield generation and potential capital appreciation.

Bitcoin price technical analysis

From a technical perspective, Bitcoin is trading inside the upper half of its Bollinger Bands, with resistance near $118,700 and support around $112,900. At 62, the Relative Strength Index indicates neutral momentum but is moving toward overbought territory.

The 10-day and 20-day moving averages are both below the current price, indicating that the short-term trend is still bullish. The MACD also shows a buy signal, though momentum indicators such as Stochastic RSI and Williams %R suggest caution as they hover near overbought levels.

In a bullish scenario, a break above $118,700 might open the door for a retesting of the mid-August high of $124,128. If Bitcoin is unable to maintain $115,000, the 100-day SMA, which is close to $111,600, will be the next support.