Bitcoin News Update: Fed's Interest Rate Reductions Set to Unleash $7.4 Trillion Liquidity Flow into Equities and Bitcoin

This week, the Federal Reserve is set to lower interest rates for the second meeting in a row, a move that experts describe as a "low-risk" approach to managing an uncertain economy influenced by trade disputes and inflation,

reports. The anticipated 25 basis point reduction in the benchmark rate will be announced alongside a policy update at 2 p.m. ET, followed by a press briefing from Chair Jerome Powell at 2:30 p.m. ET. Investors are also looking for clues about the possibility of another rate cut in December, which will depend on the September CPI data.

This rate reduction is part of a broader change in the Fed’s strategy, as officials have indicated plans to conclude quantitative tightening (QT) by redirecting maturing mortgage-backed securities into Treasuries. This shift has already led to a drop in the 10-year Treasury yield, signaling market trust in the Fed’s liquidity management. The move is in step with a worldwide trend of monetary easing, with central banks in Asia and Europe also adjusting rates to stimulate growth amid weakening demand.

The Fed’s decision is further complicated by ongoing trade talks between U.S. President Donald Trump and Chinese President Xi Jinping. Their upcoming meeting at the APEC summit in South Korea, scheduled for Oct. 31-Nov. 1, is viewed as a crucial chance to prevent a planned 100% tariff increase on Chinese imports set for Nov. 1, according to

. Trump has used tariffs as leverage to influence China’s exports of rare earths and EV battery materials, while Xi’s government has shown some willingness to negotiate. Reaching an agreement could help relieve inflation, which has pushed headline inflation up by 0.4 percentage points this year.

The Fed’s rate cut is also projected to unleash

from money market funds into riskier assets such as stocks and by 2026. With Treasury bill yields expected to dip below 4%, it’s estimated that $739 billion could shift into equities and bonds, fueling rallies similar to those seen in 2009. Bitcoin, which attracted $3.5 billion in ETF inflows in October 2025, may benefit further if institutional interest continues to grow.

On the retail front, companies are adjusting to the effects of Trump’s tariff measures. Walmart has outperformed Target, with its shares rising 18% this year, while Target’s stock has dropped 31%. Walmart’s strength in managing supply chain costs and competitive pricing has helped it thrive in the post-tariff environment, whereas Target’s focus on cultural branding has made it more susceptible to changing consumer trends.

The Fed’s rate cut coincides with a busy earnings season for U.S. corporations. Major tech firms like Microsoft, Apple, and Amazon are preparing to release their results, with particular attention on AI-driven growth and capital spending, according to

. Microsoft’s Azure cloud division is forecasted to report a 38% increase in revenue year-over-year, while Amazon faces scrutiny over how tariffs are affecting its online retail business.

Market watchers are also keeping an eye on the broader economic schedule, which remains light due to the ongoing government shutdown. The lack of key data releases has added to the uncertainty, but the Fed’s rate cut is widely seen as a stabilizing measure. As one analyst put it, "The Fed’s move is a low-risk strategy to encourage spending and investment, particularly in Hong Kong and other regions sensitive to changes in U.S. policy."