NextFin news, Federal Reserve Chair Jerome Powell addressed the economic outlook on Tuesday, September 23, 2025, in Providence, Rhode Island, stating that the balance of risks had shifted, which led the Fed to move its policy stance closer to neutral with a recent interest rate cut. Powell emphasized ongoing uncertainty around inflation and the challenges of managing persistent inflation risks.
Powell said, "In recent months, it has become clear that the balance of risks has shifted, prompting us to move our policy stance closer to neutral at our meeting last week." He added, "But uncertainty around the path of inflation remains high. We will carefully assess and manage the risk of higher and more persistent inflation."
Following Powell's remarks, Bitcoin briefly slipped to $111,000 but recovered above $112,000 by Thursday, September 25, 2025. The broader crypto market showed mixed performance amid the cautious tone from the Fed chair.
Crypto analysts reacted to Powell's stance with a mix of caution and optimism. Matt Mena, a crypto strategist at 21Shares, noted that Powell's 'wait and see' approach could cause volatility around key macroeconomic data releases, such as the unemployment claims report on September 25 and the core Personal Consumption Expenditures (PCE) index data expected on Friday, September 26.
Mena stated, "With valuations stretched and leverage elevated, markets may continue to trade in bursts of volatility around incoming data." Shawn Young, chief analyst at MEXC exchange, added that the market was already pricing in caution around these data points, which could increase liquidation pressure but also contribute to a healthy market rebalancing after recent significant liquidations.
Young commented, "While the liquidations may have introduced short-term pain, they are often a sign of a healthy rebalancing, especially considering the scale of the current one." Both analysts expressed a positive mid-term outlook, with Mena highlighting expectations of further Fed rate cuts this year, which could support a market reset rather than a trend reversal.
Institutional interest in cryptocurrencies remains strong despite short-term volatility. Bitcoin ETFs recorded inflows of approximately $977 million in the last reported week, accounting for about 51% of total crypto flows, according to CoinShares data. This institutional demand underscores confidence in the crypto market's longer-term prospects.
Meanwhile, the Federal Reserve's recent 25 basis points rate cut—the first in nine months—was motivated by signs of labor market fragility and persistent inflation above target levels. Powell and other Fed officials have emphasized a cautious approach to future monetary policy adjustments amid economic uncertainties.
Overall, the crypto market's short-term reaction to Powell's speech on Thursday, September 25, 2025, was characterized by volatility and cautious trading. However, analysts and institutional investors maintain a constructive outlook for cryptocurrencies in the medium term, anticipating that ongoing Fed rate cuts and economic developments will support market growth.
Sources: AMBCrypto (https://ambcrypto.com/jerome-powell-said-risks-shifted-this-week-how-the-crypto-market-reacted/), CoinShares, Federal Reserve official statements.
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