Morgan Stanley Forecasts 25 Basis Point Rate Cut
Morgan Stanley anticipates that the Federal Reserve will implement a 25 basis point interest rate cut, bringing the target range to 3.75%-4.00%. This move is seen as a continuation of ongoing monetary easing efforts by 2025.
Such adjustments in monetary policy have a significant influence on both the broader economy and the digital asset sectors. The Federal Reserve's decisions reflect its ongoing strategy to adapt to economic conditions.
Lower interest rates can potentially stimulate speculative investment in higher-risk assets, including cryptocurrencies. Morgan Stanley's analysis suggests a predicted depreciation of the US dollar amid these rate cuts, which would have implications for cross-asset and cryptocurrency valuations.
The projected rate cut is expected to have broader implications for cross-asset valuations, potentially creating more favorable conditions for digital assets. The market outlook indicates growing speculation about extended asset inflows into Bitcoin (BTC) and Ethereum (ETH) due to an anticipated increase in risk appetite associated with reduced interest rates.
While lower interest rates are generally seen as a catalyst for interest in riskier assets, industry observers have not yet confirmed significant increases in crypto trading volumes or notable activity in decentralized finance (DeFi). The Federal Reserve's monetary policy decisions remain under close scrutiny, as they are expected to shape investor sentiment across various market segments in the context of forthcoming mitigation strategies.
Historical Impact of Fed Policies on BTC and ETH
Historically, Federal Reserve rate cuts have often led to increased demand for Bitcoin and Ethereum. However, it typically takes several weeks for these trends to be reflected in noticeable spikes in trading volumes.
As of October 28, 2025, Bitcoin (BTC) is trading at $113,811.29, with a market capitalization of $2.27 trillion. CoinMarketCap data indicates a 24-hour trading volume of $58.66 billion, with a 1.42% decrease in price over the last day and a 5.50% gain over the past seven days. The current supply of BTC is reported at 19,940,981.
Analysts suggest that Federal Reserve policies contribute to a range of financial repercussions across different assets. Historically, lower interest rates have encouraged alternative investments, leading to increased institutional interest in cryptocurrencies.
The Coincu research team projects continued fluctuations across crypto markets, which will be influenced by the Federal Reserve's subsequent policy adjustments.
Jay Bacow, Co-Head of Securitized Product Research at Morgan Stanley, commented on broader rate policy, stating, "We don't think that the Fed cutting rates as the market expects is sufficient cause for the 30-year fixed mortgage rate to come down."