Crypto Market September Monthly Report: Fed Rate Cuts in 2025, This Time It's "Fuel" Rather Than "Spark"

The Fed officially began the interest rate cut cycle in September 2025, and this macro policy turning point is creating an unprecedented favourable environment for encryption assets. Although the market has experienced fluctuations in the short term, the cheap liquidity brought by interest rate cuts, the demand for institutional allocation, and the global desire for alternatives to TradFi are forging a new cornerstone for the crypto market.

In August, the core PCE in the U.S. still reached 2.7%, which is significantly higher than the policy target, but under pressure from the cooling job market, the Fed began preventive interest rate cuts in September: On September 17, 2025, the Fed made the long-awaited decision to cut rates by 25 basis points, lowering the target range for the federal funds rate from 4.25%-4.50% to 4.00%-4.25%, officially starting the interest rate cut cycle of 2025. This is also the Fed's implementation of an accommodative monetary policy again after three rate cuts in 2024.

In the latest statement from the interest rate meeting, the Fed removed the key phrase "the labor market remains strong" and instead emphasized that "employment growth has slowed, and the unemployment rate has risen." This shift indicates that, in its dual mission of inflation and employment, the Fed has officially shifted its policy focus to protecting the job market.

Powell admitted at the press conference that "there is no risk-free path to take," highlighting the cautious attitude towards the current round of preventive rate cuts. The new dot plot shows that Fed officials predict the median interest rate to be 3.6% by the end of 2025, implying there is still room for two more rate cuts this year. The market reacted strongly; according to CMEWatch, the probability of a rate cut in October has risen to 91.9%, and the probability of completing the third rate cut of the year in December exceeds 60%. Although there are slight differences between the dot plot guidance and market expectations, the easing tone has basically been established. The market had previously priced in a small number of rate cuts this year, but after this meeting, that pricing has further increased.

In addition, the final value of the September Consumer Confidence Index released by the University of Michigan was 55.1, a decline of about 5% from August's 58.2, lower than the market expectation of 55.4, and a significant drop of 21.4% compared to the same period last year, marking the lowest level since May 2025. Recent data shows signs of cooling in the labor market (which is also one of the reasons the Fed decided to cut interest rates in September), and the market is highly focused on the upcoming September non-farm employment data; any signs of weakness could strengthen the Fed's expectations for rate cuts.

Overall, the current macroeconomic situation in the United States presents a picture of strong economic growth but insufficient consumer confidence, while the policy outlook is filled with uncertainty. The Fed will continue to cautiously balance the dual objectives of supporting employment and controlling inflation under a data-dependent framework, with each interest rate decision feeling like walking a tightrope.

Historical data shows that the US stock market often performs weakly in September, leading to the saying of "September Curse". However, driven by news of interest rate cuts, the Nasdaq, S&P 500, and Dow Jones indices all rose together this September, reaching historical highs. Technology stocks performed particularly strongly, with Intel (NASDAQ: INTC) once seeing a single-day increase of over 22%, and AI-related sectors continued their leading trend since the beginning of the year.

This round of price increase is supported by dual driving forces: on one hand, the interest rate cut cycle has significantly enhanced risk appetite, aligning with the historical trend where equity assets benefit first during preventive interest rate cut cycles; on the other hand, the AI industry is experiencing substantial performance growth, with examples such as Nvidia's (NASDAQ: NVDA) investment of billions of dollars into OpenAI providing solid support for technology stock valuations.

! Interestingly, Nvidia, OpenAI, and Oracle (NASDAQ: ORCL) seems to have created a new valuation framework for Silicon Valley: Nvidia's $100 billion investment will be gradually put in place with the deployment of OpenAI's 10 gigawatts of computing power data center, and each gigawatt of computing power will require 400,000-500,000 GPUs, and the total amount of 10 gigawatts is equivalent to Nvidia's annual shipments - which means that the investment funds will eventually flow back to NVIDIA through OpenAI's GPU purchase orders, and Nvidia will also be able to obtain it through equity OpenAI's profit share; Oracle's participation further strengthened the closed loop, first spending $40 billion to purchase NVIDIA chips, building a "Stargate" data center for OpenAI, and then exporting computing power to OpenAI through a $300 billion cloud service contract, forming a closed-loop capital flow link between "OpenAI →Oracle→ NVIDIA →OpenAI".

This model will drive the reconstruction of technology stock valuations. NVIDIA has strengthened its pricing power and performance visibility in the AI chip field by binding downstream core customers; Oracle has achieved a curve-over-take in the cloud service market; OpenAI has gained funding and computing power support for continuous development. This strong alliance further intensifies the Matthew effect in the AI industry, with resources continuously concentrating on leading enterprises, not only enhancing the certainty and collaborative efficiency of various businesses but also redefining the competitive paradigm of tech giants in the AI era, providing investors with a new framework for analyzing the value of technology stocks.

However, Fed Chairman Powell has also clearly warned that the stock market is currently "overvalued". This statement is particularly crucial against the backdrop of hitting new highs. Currently, both the S&P 500 and the Nasdaq have increased by more than 20% this year, and the valuations of AI concept stocks have partially exhausted future performance. Any hawkish signal could trigger profit-taking. Notably, Powell emphasized that this rate cut "does not mark the beginning of an aggressive easing cycle," which implies that the release of liquidity will maintain a gradual pace.

Looking ahead, the U.S. stock market still faces multiple challenges. The resilience of inflation is the main constraint, with the August core PCE year-on-year at 2.7%, significantly above the policy target. If subsequent data rebounds, it may force the Fed to slow down its rate cuts. Meanwhile, there are certain divergences within the Fed regarding the policy path, and the risk of government shutdown may delay the release of key data, all of which will exacerbate market fluctuations.

**Despite the pullback of Bitcoin in September, which briefly fell below $110,000, there was strong support formed in the $90,000 to $105,000 range, once again validating the institutional behavior pattern of "buy on expectation, hold on fluctuation". For example, on September 25-26, due to some investors' macro risk aversion sentiment regarding the potential "shutdown" of the U.S. federal government due to budget issues, combined with long-term Bitcoin holders taking profits and market declines triggering high leverage liquidations, funds flowed out of risk assets such as Bitcoin. However, institutional investors viewed this as a buying opportunity. On the day of the price drop on September 25, U.S. spot Bitcoin ETFs recorded a net inflow of $241 million. Among them, BlackRock's IBIT single fund alone saw an inflow of nearly $129 million, bringing its total holdings to 768,000 BTC (approximately $85.2 billion).

Historical data also shows that after the Fed initiated "preventive rate cuts" in 2019, Bitcoin experienced nearly half a year of initial fluctuations. As the long-term effects of the low interest rate environment gradually emerged, Bitcoin stabilized at $7,000 at the end of 2019, continuing its upward trend into 2020. By the end of 2020, the price broke through $29,000, a gain of over 200% compared to the peak of $10,000 during the initial rate cuts in July 2019; if calculated from the low point of $7,000 at the end of 2019, the increase exceeds 300%.

The initiation of the interest rate cut cycle means that interest rates in the TradFi market are declining. In a low financing cost environment, companies are naturally more willing to invest funds in assets with high growth potential, and the actions of institutional investors will also be clearer. However, unlike the interest rate cuts in 2019, the current cycle has added a significant variable, namely the crypto treasury allocation of public companies.

Moreover, these enterprises' treasury allocation of crypto assets is bidding farewell to the early marginal experiments and tentative holdings, and is transitioning to a long-term, strategic allocation. In September, the board of directors of Nasdaq-listed Jiuzixing Energy (Jiuzikong Holdings) ((NASDAQ:JZXN)) approved a crypto asset investment plan of up to $1 billion, with management emphasizing that they "do not pursue short-term trading profits," but rather view crypto assets as a "long-term storage of value for hedging against macroeconomic uncertainties," highlighting the long-term and strategic nature of the allocation behavior. On the regulatory front, in September, the U.S. SEC and FINRA announced investigations into over 200 listed companies that announced crypto treasury plans, focusing on abnormal stock price fluctuations before their announcements. This move poses challenges in the short term, but in the long run, clearing out those "pseudo treasury" companies attempting to manipulate market value through the "crypto narrative" is a way for the market to distinguish truth from falsehood, establishing a healthier development environment for treasury allocation models that genuinely possess strategic value. For market participants, the dynamics of treasury allocations will become another reliable "window" to understand industry direction.

In short, the evolution of crypto treasury configurations reflects the overall trajectory of the crypto market from the margins to the mainstream, from speculation to practicality, and from individuals to institutions. As the interest rate cut cycle continues, the dual drivers of a low-interest rate environment and technological innovation are expected to further deepen and diversify the crypto allocations of corporate treasuries. Companies that write crypto assets onto their balance sheets express their confidence in the future of crypto assets in the most direct way with real money. This confidence, against the backdrop of interest rate cuts providing ample ammunition, is likely to become a key force driving the next round of growth.

Looking ahead, at least three factors are creating a favourable environment for crypto assets, making them a more attractive choice:

Macroeconomic "fuel" - there will be 2-3 more interest rate cuts within the next year;

Political cycle reinforcement - the Trump administration's pro-crypto policies and the challenge to the Fed's independence highlight the hedging properties of decentralized assets;

The global economy is experiencing a "real-virtual linkage" — the rise in gold prices indicates concerns about recession, while crypto assets possess both the value storage properties of gold and the growth potential of technology, making them a better allocation choice during the interest rate cut cycle.