Fed's Interest Rate Decision in the Smoke of Gunfire - Three Signals That Encryption Investors Must Follow

Written by: Luke, Mars Finance

On September 16, the Federal Open Market Committee (FOMC) of the Federal Reserve officially convened a two-day interest rate meeting. As is customary, global markets should have focused on the upcoming interest rate decision to be revealed the day after tomorrow (early morning of September 18, Beijing time). However, today's news confirms that an unprecedented personnel contest has been settled: the court rejected the White House's request to dismiss board member Lisa Cook, while the newly nominated board member Stephen Milani has already taken his oath of office. This arrangement of "one staying, one coming in" signifies a historic direct confrontation at the Federal Reserve's decision-making table between two entirely different ideologies—one defending the traditional independence of central banks, and the other advocating that monetary policy should serve political agendas.

Therefore, the core focus of this conference has quietly shifted from interpreting economic data to assessing the resilience of the Federal Reserve's system. However, before delving into these profound institutional signals, we first need to clarify the several possible paths at a purely economic level that this conference may take, and their direct impact on global assets. Because regardless of the political maneuvering, it will ultimately be reflected through specific interest rate numbers.

Economic Simulation Under the Clamor: Two Paths of Interest Rate Cuts and Their Global Impact

Path One: A 25 Basis Point Rate Cut - The "Mild Release" Script

This is the mainstream expectation in the current market. A 25 basis point rate cut not only aligns with the market's expectations for a loosening cycle but also appears restrained and steady, representing a typical "moderate release." Historically, although September is often referred to as "the most dangerous month for the stock market," when the Federal Reserve sends clear signals of easing, the market tends to receive a short-term boost. If this scenario unfolds, U.S. stocks are likely to continue a volatile upward trend in the short term, with market risk appetite becoming more positive.

More importantly, this move by the Federal Reserve will trigger a resonance effect in global liquidity. Under the system where the dollar serves as the global pricing anchor, the Federal Reserve's shift to easing will almost inevitably trigger a chain reaction of "global monetary easing." Central banks in various countries will likely follow suit by cutting interest rates to avoid excessive appreciation of their currencies relative to the dollar and capital outflows. This means that global market liquidity will become more abundant, spilling over not only into the stock market but also into a broader range of asset classes.

Gold: As a traditional safe-haven and anti-inflation asset, it will gain additional favor from funds during a loose monetary policy period.

Cryptocurrency: Assets like Bitcoin, which are most sensitive to liquidity, often experience the fastest and most intense rebound when the "tap" is turned on.

Commodities: Industrial products such as oil and copper are expected to remain strong under the dual influence of improving economic demand expectations and capital support.

It can be said that a 25 basis point rate cut is the starting point for the "comprehensive benefit of global asset prices."

Path Two: A 50 Basis Point Rate Cut - Alarm of "Crisis Signals"

However, the market must be wary of another possibility: under the strong political pressure from the White House, the Federal Reserve chooses to cut interest rates by 50 basis points in one go. On the surface, this seems like a bigger "positive", but how will the market interpret it?

The answer is: risk signal. Central banks usually only adopt such radical "shock therapy" when they perceive a risk of a "hard landing" in the economy. If the Federal Reserve unexpectedly cuts interest rates significantly, investors will immediately interpret it as - decision-makers have seen worse recession data that we have not.

At this time, the injection of short-term liquidity will be completely overwhelmed by panic, which may lead to a sharp decline in risk assets such as U.S. stocks, in a scenario where "good news turns to bad news." In this chaotic situation, we may even see both gold and the U.S. dollar, traditionally viewed as opposing assets, rise simultaneously in a unique flight to safety.

In summary: a 25 basis points rate cut is a "prudent release," while a 50 basis points rate cut resembles a "crisis signal."

However, as we emphasized at the beginning, the historical significance of this meeting in September 2025 goes far beyond this. Regardless of whether the final outcome is 25 points or 50 points, it is the decision-making process, voting discrepancies, and political compromises behind it that truly define the direction of the market in the next phase. This is precisely why we must pay attention to those three core signals.

Signal One: The Rift in Voting Results - The End of Consensus?

In the past, the voting results of the FOMC were usually highly unanimous, even if there were one or two dissenting votes, they were mostly based on good-faith, technical economic viewpoint differences. However, this time, the distribution map of the voting results will become the most intuitive "electrocardiogram" for measuring the health of the Federal Reserve system.

What we need to focus on is not who wins or loses, but the depth of the rift.

An 11-1 or 10-2 result can still be interpreted as a basic stability of the institutions under pressure. However, if there is a serious split vote similar to 8-4 or 7-5, especially when the opposing votes come from both extremes— for example, Milan might vote against due to hopes of a 50 basis point rate cut, while the hawks in the committee might vote against any rate cut— this would be an extremely dangerous signal.

This "dual dissent" means that Federal Reserve Chairman Jerome Powell has lost absolute control over the committee, and the internal consensus has collapsed. A central bank that cannot reach a consensus will see a significant discount on the credibility of its policies and the predictability of the future. For the cryptocurrency market, which relies on a stable macro environment for risk pricing, this "end of consensus" is itself the biggest macro risk.

Signal Two: Powell's Words - The "Last Federal Reserve Man" Stance

If the voting results are cold numbers, then Powell's words and demeanor at the post-meeting press conference will serve as a more emotional thermometer for interpreting this storm. Be sure to turn off those quick news reports that only announce the interest rate figures, turn on the live broadcast, listen carefully to every word he says, and observe every one of his expressions.

Is he reciting from a script or does he appear to be at ease after going off-script? When reporters sharply question him about presidential interference and internal disputes, will he choose to evade the question with diplomatic language, or will he reaffirm the Federal Reserve's commitment to defending its independence like former Chairman Paul Volcker?

Does his rhetoric reveal exhaustion and compromise, or does it display the posture of a defender of the system as the "last Federal Reserve person"? Powell's personal credibility largely embodies the credibility of the Federal Reserve. His performance will directly influence the global market's judgment on the core question of whether "the Federal Reserve is still the most professional adult in the room."

Signal Three: ETF Fund Flows - The Final Judgment of the Crypto World

When the political mudslinging in Washington settles down and the traders in traditional markets digest the direct impact of the interest rate decision, the real judgment will be made by the crypto world itself. The most honest indicator will be the flow of funds into global Bitcoin spot ETFs in the weeks following the end of the meeting.

This multi-billion dollar institutional capital is one of the smartest and most perceptive forces in the market. Their movements will answer that ultimate question: Is this internal crisis of the Federal Reserve seen by the market as a short-term risk to be avoided, or is it a strategic opportunity to affirm Bitcoin's long-term value proposition?

If capital continues to flow out: This indicates that institutional investors view the politicization of the Federal Reserve as a destabilizing factor for the entire dollar system, triggering a comprehensive wave of "de-risking," putting pressure on all risk assets (including cryptocurrencies) in the short term.

If funds are significantly flowing in: this will be a historic signal. It means that institutional capital is beginning to truly execute that legendary "script" - using Bitcoin as a tool to hedge against the systemic risks of sovereign currency systems. When the credibility of the central banks that control the world's reserve currency is compromised, funds will flow to that value island guaranteed by code and unaffected by any political intentions.

Ultimately, for those of us deeply engaged in the decentralized world, one of the most counterintuitive yet profound truths is being tested: the most powerful long-term catalyst for Bitcoin's rise may not be a continuously dovish Fed, but rather a Fed whose credibility is being eroded in real-time.

The storm in September 2025 is providing the most vivid and public evidence for this conclusion. Forget about the numbers, learn to interpret the signals; this is the way for us to survive under the new macro paradigm.