S&P 500 Hits New Highs After Rate Cut As Crypto Market Stays Muted

Key Insights:

• The S&P 500 and crypto market are moving apart as Bitcoin reacts slower to new money.
• Crypto is cautious because liquidity is still low and signals are mixed.
• Stocks rise faster due to debt buybacks, lower rates, and fresh money support.

The S&P 500 closed above 6,900 for the first time. This came right after the Fed cut interest rates by 25 basis points. A rate cut means borrowing becomes cheaper.

When borrowing becomes cheaper, money often moves into risk assets. Stocks reacted quickly.

But the crypto market did not show the same move, even though it was up at the press time. This gap is now the main question for traders planning the next wave of investment.

Stocks Move Up After the Fed Cut, but Crypto Market?

The S&P 500 has recovered almost all losses from the last few weeks. It is now up more than 42% from the April 2025 bottom.

This strong move happened right after the Fed lowered rates and added more money into the system.

Lower rates reduce stress on companies. They also make traders feel safer taking risks again.

However, the crypto prices did not react the same way. Bitcoin fell right after the rate cut and then moved back up slowly.

Many traders expected a strong move from Bitcoin, but that did not happen.

One reason is the low positive correlation between Bitcoin and the S&P 500. A positive yet low correlation means two assets often move slowly in parallel to each other or even move differently, unbothered by the other.

When the S&P 500 moves up, crypto prices does not always follow. This pattern has stayed in place for many weeks.

The crypto market is also facing its own problems. Liquidity, which means money available for trading, is still low. When big traders buy or sell, prices can move fast.

This makes the digital assets’ traders more cautious, even if stocks are moving higher.

Macroeconomic Factors That Matter Now

Stocks also felt support from the bond market. The U.S. Treasury bought back $12.5 billion of its own debt. This is the largest buyback ever.

A buyback reduces the amount of debt in the market. When there is less debt, bond yields often move lower. Lower yields make borrowing easier and can support risk assets.

The Fed also started buying more short-term bills. This adds more fresh money into the system. When new money enters markets, stocks often respond first. But crypto market traders are waiting because they are unsure how long this support will last.

Government revenue increased last month, while government spending decreased.

This pushed the monthly deficit to its lowest level since 2017, not counting the pandemic. But the bigger picture shows pressure. The first two months of the new fiscal year already have a deficit of 457.6 billion dollars, the second-highest in history.

A high deficit means the government may need to borrow more later. More borrowing can add risk for all markets. And that could be the reason why the crypto market, deemed the riskiest of all, has remained muted.

For stocks, this setup still looks supportive but it creates uncertainty for the crypto prices. Crypto traders worry that if the deficit increases again, the Fed may need to change its plans later.

Sudden changes in policy can make crypto market more unstable in the near term.

Will Crypto Market Follow the S&P 500 or Find Its Own Way?

Right now, stocks and crypto market are showing very different behavior. Stocks are rising because they have clear support from lower rates, debt buybacks, and more money entering the system. Crypto is waiting because its signals are mixed.

Bitcoin usually reacts fast to new liquidity. This time it is slower. This shows traders may want more proof that money will stay loose.

There is also the chance of a “lag effect.” Crypto sometimes reacts after stocks, but with a delay.

If more money continues to enter the system and global rates stay low, crypto may still follow later. Traders also expect that if the Bank of Japan does not raise rates, global money will stay easy.

Easy money can help in a recovery for the crypto prices. So, the main question now is simple: Will crypto market join the rally, or will it stay cautious until clearer signals appear?

The answer depends on liquidity. If more money enters exchanges and big buyers return, the riskier assets like crypto can follow the S&P 500.

If not, the gap between the two markets may become larger. For now, stocks are celebrating while the digital assets is lagging. And the split between the S&P 500 and crypto market has become the most important chart of the week.