Federal Reserve’s Rate Cut Probability Affects Crypto Markets

The U.S. July Producer Price Index (PPI) data release on August 14, 2025, shifted Federal Reserve rate cut expectations for September to a 92.5% likelihood.

Market volatility in Bitcoin and Ethereum often intensifies following shifts in Federal Reserve rate policy, influencing trading volumes and institutional investment strategies.

Fed’s Rate Decision Sparks $2 Million Options Surge

Crypto markets responded swiftly, with volatility in Bitcoin and Ethereum. Lower interest rates are seen as conducive to these assets due to their macro hedge narrative. Influencers like Rick Rieder from BlackRock expressed expectations for rate reductions, potentially even 50 basis points, adding to market speculation. There were no public comments from Jerome Powell or other Federal Reserve members regarding these changes as of the report update.

Bitcoin (BTC) currently stands at $117,792.10, with a market cap of $2.34 trillion and 58.79% market dominance. Trading volume reached $105.29 billion, down 20.39% in 24-hours. BTC’s price has dipped 4.05% in the past day, although it has gained 12.39% over the last 60 days. Data courtesy of CoinMarketCap, as of August 14, 2025.

“Despite today’s (Tuesday’s) inflation data being slightly stronger than the previous few months, it is far below the worry levels of many. Therefore, we expect the Federal Reserve to begin lowering rates in September, and there is even a reasonable basis for a 50 basis point rate cut.” — Rick Rieder, Chief Investment Officer of Global Fixed Income, BlackRock

Crypto Markets React to Fed’s Rate Cut Outlook

Did you know? Historically, a shift to risk-on sentiment in the cryptocurrency market often follows Federal Reserve rate cuts, with Bitcoin and Ethereum leading positive price actions due to diminished U.S. dollar yields.

The Coincu research team highlights increasing allocations to crypto by institutional investors amid predicted monetary easing. Historically, rate cuts boost crypto’s risk-on sentiment, affecting BTC and DeFi protocols significantly. Bitcoin’s historical trends mirror these macroeconomic shifts, reinforcing its role as a hedge.

The Coincu research team highlights increasing allocations to crypto by institutional investors amid predicted monetary easing. Historically, rate cuts boost crypto’s risk-on sentiment, affecting BTC and DeFi protocols significantly. Bitcoin’s historical trends mirror these macroeconomic shifts, reinforcing its role as a hedge.