Crypto Market Down Despite Fed Rate Cuts: Will It Recover Soon?

Why Is Crypto Market Down Today: Fed Rate Cuts or Shutdown the Reason?

Why is crypto market down today despite the U.S. Federal Reserve announcing a rate cut? Investors expected relief, but the opposite happened — Bitcoin and Ethereum plunged as economic uncertainty, US government shutdown, and whale sell-offs triggered a global sell-off across the crypto landscape.

The global crypto market cap slipped 2.1% to $3.81 trillion, with Bitcoin and Ethereum leading the decline as uncertainty rattled traders.

Fed Rate Cuts Fail to Lift the Market

The U.S. Federal Reserve FOMC on October 29, 2025, saw a 25 basis point rate cut, reducing the federal funds range to 3.75%–4.00%. While the action was expected, investors were cautious. Inflation is "somewhat elevated," hiring is slowing, and unemployment crept higher — all signs of an economy weakening.

The Fed's cautious script trumped the bullish effect of rate cuts. Risk assets, including crypto, fell as investors reacted to the Fed's statement as a signal that economic speed is slowing down. Bitcoin fell by 2.35% within 24 hours, falling to $108,378 before recovering to $110,248.73 with a market cap of $2.19T. 

Source: CoinMarketCap

Ethereum fell by 2.15%, reaching $3,854 briefly before hitting $3,898.41 about with a market value of $470.53B.

US Government Shutdown and Housing Crisis Put Pressure

The current U.S. government shutdown, marking its 30th day, has come with a data blackout that suspended important reports such as GDP and employment numbers. Without data, investors cannot make informed judgments about real economic health, leading to panic selling of risk assets such as Bitcoin and Ethereum.

According to The Kobeissi Letter, the US housing affordability crisis intensified. Home price to income ratio reached an all-time high 4.4x, exceeding the housing bubble level in 2006. Home prices have climbed 139% since 2011 while median income increased only 68%. These figures speak of mounting financial stress, which translates to generalized risk aversion that spills over into the crypto.

Source: X

Whale Selling and Market Liquidations Exacerbate the Crash

Whale activity intensified the decline. Whale address 0x5509 panic-sold 10,000 ETH ($39.11M) at a loss of $7.5M and Vitalik Buterin also sold 14,216 USDC-worth of free memecoins. Popular Bitcoin OG Owen Gunden dumped 2,587 BTC ($290M) on Kraken within a 10-day period, adding to selling pressure, as per Loononchain data.

Source: X

Liquidations followed swiftly — 164,578 traders were wiped out in 24 hours, totaling $825.09 million in forced sales. The largest single liquidation occurred on Bybit for $11 million in BTCUSD futures, deepening short-term volatility and driving prices further down.

Trump–Xi Tariff Talks Bring Temporary Relief

Amid the chaos, President Trump announced a 1-year trade deal with China on rare earths and critical minerals after his meeting with President Xi. The U.S. agreed to reduce overall tariffs from 57% to 47% and fentanyl tariffs to 10%, while China pledged to ease chip restrictions with Nvidia. Despite this positive development, traders remained wary, waiting for concrete follow-through on trade cooperation.

Will the Market Recover or Crash Harder?

Even in the turbulence, not all whales are bearish. On-chain data from Lookonchain shows traders like 0x9553 and 0x6988 opening 40x long BTC and 25x long ETH positions worth millions, betting on a rebound. This signals confidence among major holders that the dip is temporary.

Conclusion

In summary, the crypto market downturn stems from macroeconomic uncertainty, the prolonged U.S. government shutdown, housing stress, and massive whale sell-offs — not the Fed meeting itself. Despite today’s crash, on-chain data suggests optimism remains strong. The answer to why is crypto market down today may simply be — it’s a pause before the next surge.

Disclaimer: This article is for informational purposes only, not to be considered as financial advice. Do your own research before investing.