Bybit’s analysis notes the initial tailwind from Fed easing was quickly tempered by Powell’s refusal to pre-commit for December, leaving institutional options traders firmly in a defensive, hedged posture.
Summary
Bybit says the Fed’s October rate cut briefly lifted crypto before Powell’s cautious tone cooled sentiment.
Treasury yields reversed higher as traders priced in a potential December pause.
Privacy tokens like Zcash outperformed, reflecting a search for alpha beyond macro trends.
In their latest Crypto Insights Report, Bybit analysts said the Federal Reserve’s October 29 rate cut delivered only a brief lift to digital assets before sentiment cooled. The Fed’s decision to trim the federal funds rate by 25 basis points to a range of 3.75%–4% initially sparked optimism across risk markets.
But Chair Jerome Powell’s reluctance to signal further easing in December quickly muted the rally. Bybit noted that while Bitcoin (BTC) and Ether (ETH) ticked higher on softer yields, institutional options traders kept their positioning defensive, signaling limited confidence in a sustained policy shift.
“The Federal Reserve’s October rate cut marked a pivotal moment in the 2025 policy cycle, signaling a shift toward growth support amid persistent inflation and labor market fragility. While the move was widely anticipated, its ripple effects across both traditional and digital asset markets were anything but uniform,” Bybit analysts wrote.
Mixed market signals blur Fed impact
The schism in sentiment was not confined to digital assets. Bybit’s report highlights how Powell’s cautious tone triggered a sharp reversal in Treasury markets. Yields, which had dipped in anticipation of the cut, abruptly reversed and climbed higher as traders priced in the increased probability of a policy pause in December.
Credit markets, meanwhile, held firm. Bybit noted that the Fed’s decision to halt balance sheet runoff beginning December 1 reflected growing unease over liquidity in short-term funding markets; a signal that policy makers are managing risk as much as they are stimulating demand.
Bybit’s report highlighted that this uncertainty has paradoxically energized parts of the digital asset space. The analysts pointed to the outsized gains in privacy tokens like Zcash as evidence of this shift.
While BTC and ETH moved with the macro tide, these assets decoupled, driven by their own internal catalysts. This indicates that in the absence of a dominant, clear macro narrative, capital is beginning to seek out alpha in corners of the crypto ecosystem less tied to the Fed’s next move.
The broader takeaway from Bybit’s analysis is that the crypto market is undergoing a fundamental maturation. It is increasingly behaving as a high-beta macro asset, sensitive to liquidity shifts from institutions like the Fed, but no longer slavishly dependent on them.
