Fed Rate Cut Confidence Softens, Crypto Market Eyes This Key Data

Key Insights:

• Crypto market volatility continues as the prediction market suggests confidence of institutions and traders on Fed rate cuts in September softens.
• The personal consumption expenditures (PCE) inflation data becomes the key decider for the September Fed rate cut.
• Bitcoin price is trading near support at $112k, but analysts suggest buying at dips.

Institutions and traders are losing confidence in the U.S. Federal Reserve resuming interest rate cuts in September. The recent FOMC Minutes revealed that most committee members consider inflation risks outweighing labor market weakness, with the PPI inflation rising a massive 0.9% in a month.

The crypto market traders turned cautious and await the Fed’s preferred inflation gauge, the personal consumption expenditures (PCE) inflation data. Bitcoin price has since tumbled more than 10% to touch $112k.

Crypto Market News: September Fed Rate Cut Doubts Resurface

The September 17 FOMC meeting remains the most significant event for global markets, with the FOMC Minutes failing to provide cues on the crypto market direction.

Prediction markets, including Kalshi, data showed 25 bps rate cut bets falling and the Fed maintaining rates bet rising.

Notably, 68% now expect a 25 bps Fed rate cut in September, but it’s trending down. Meanwhile, 34% people anticipate no change in the Fed funds rate.

Over the past two weeks, confidence in the Fed rate cut in September has softened, while bets on the Fed holding steady have climbed.

This happened after the US PPI inflation jumped 0.9% in July, raising core PPI inflation to 3.7%.

Meanwhile, the CME FedWatch tool showed nearly 79% probability of a 25 bps Fed rate cut in September.

It dropped from a 99% probability, with traders now estimating odds of two rate cuts this year instead of three.

Crypto Market Awaits US PCE Inflation Data

Intense volatility and uncertainty are impacting the global markets, with crypto market investors losing billions in a few weeks.

All eyes are on the personal consumption expenditures (PCE) inflation data due August 29, which would clear the air on the expected Fed decision on September 17.

The headline US PCE inflation in June increased 2.6% year-on-year, compared to an upwardly revised 2.4% print in May and forecasts of 2.5%.

Leading Fed Chair contender James Bullard proposed a total of 100 bps rate cuts this year to address slow economic growth amid tariff-induced inflationary pressures. He told Bloomberg about the high possibilities for further cuts in 2026.

In contrast, Kansas City Fed President Jeff Schmid showed hesitation about a widely expected September rate cut.

President Donald Trump urged the FOMC and Jerome Powell to proceed with larger rate cuts. Trump has selected candidates to replace Powell, while Treasury Secretary Scott Bessent confirmed that interviews will start after Labor Day.

Meanwhile, US 10-year Treasury yields jumped higher as investors look ahead to Fed Chair Powell’s Jackson Hole speech. The US dollar index (DXY) climbed to 98.34 at the time of writing.

Bitcoin Price Found Support at $112K

Amid the ongoing crypto market volatility, analyst Michael van de Poppe has shared a key analysis for Bitcoin price. He claimed Bitcoin was moving in classic price action.

The price failed to break through the first resistance point at $114.7K but the price action remained volatile.

With Bitcoin slump creating a buying opportunity at dips, he recommended accumulating if BTC price tanks below $110K.

Meanwhile, crypto analyst Rekt Capital expected a Bitcoin price crash similar to 29% in 2017 and 25% in 2021.

BTC price was down 0.31% in the past 24 hours, with the price trading at $112,892. The 24-hour low and high were $111,986 and $113,969, respectively. Trading volume fell by 10% in the last 24 hours, indicating a decline in interest among traders.