Traders Expect Fed to Cut September Rates, Impact Markets

Traders anticipate a 25 basis point interest rate cut by the Federal Reserve in September, with expectations extending to October, influencing both traditional and cryptocurrency markets.

Such rate cuts can bolster risk assets like cryptocurrencies, spurring speculative activity and impacting token pricing dynamics across various altcoin markets.

Traders Expect Fed to Cut September Rates, Impact Markets

According to CME FedWatch, market participants currently see a 90% likelihood of a 25 basis point rate cut by the Federal Reserve in September. This represents a shift in expectations, as the probability of no rate cut has fallen to zero. In related developments, CITIC Securities predicts further rate reductions of the same amount in both October and December.

The expected rate cut is poised to lower borrowing costs, potentially enhancing financial conditions for risk assets, including cryptocurrencies. If realized, investor sentiment may grow more favorable, triggering trading interest particularly in high-risk assets.

“The Federal Reserve will cut interest rates by 25bps in September, and will cut rates by another 25bps in October and December respectively,” says CITIC Securities.

Potential Crypto Market Volatility from Fed Policy Shift

Did you know? The Federal Reserve’s previous rate cuts have historically led to rallies in bitcoin and several altcoins, as lower interest rates often bolster speculative investments. Such periods typically see increased capital flow into digital assets.

As per CoinMarketCap, Ethereum (ETH) is currently trading at $4,309.77, with a market cap of “520.21 billion”. Over the past 24 hours, trading volume reached “19.24 billion”, seeing minor fluctuations of 0.28%. Ethereum’s circulating supply stands at over 120.70 million tokens, indicating robust market activity.

Coincu’s research team notes that a potential rate cut by the Fed could heighten crypto market volatility. Historical trends suggest that Bitcoin (BTC) and Ethereum (ETH) might benefit, attracting increased capital inflows. Analysts highlight that the ecosystem should prepare for immediate liquidity shifts if such policies are adopted.