According to a Reuters financial report, financial institutions Goldman Sachs, Wells Fargo, and Citigroup anticipate the Federal Reserve to begin cutting interest rates in September of this year. All three entities project a total 75 basis point interest rate cut rolled out over three cuts. JPMorgan anticipates a 25 basis point rate cut in December 2025, while Morgan Stanley does not expect the Federal Reserve to announce a rate cut this year. Let’s discuss how the cryptocurrency market may be affected by an interest rate cut.
Will the Cryptocurrency Market Rally After A Rate Cut?
A dip in interest rates makes borrowing and spending easier. It also weakens the dollar while fighting economic stagnation or recession. The slashing of interest rates often leads to investors taking on more risks. The cryptocurrency sector is one of the riskiest markets in the financial realm. Cryptocurrency investments usually experience a spike in the invent of an interest rate cut. The development could lead to crypto assets picking up steam.
The cryptocurrency market experienced a dip after the Federal Reserve announced that it would keep interest rates unchanged after its July meeting. Federal Reserve Chair Jerome Powell also warned about slow economic growth. Powell’s comments may have spooked retail investors from taking risky bets. There was also some buzz about the Federal Reserve potentially hiking interest rates to combat slow economic growth.
Also Read: Demand For US Dollar Rises, Oil Companies Say No To Local Currencies
President Trump’s latest tariff spree may also negatively hit the US economy. If conditions worsen, the Federal Reserve may continue to keep interest rates unchanged for the remainder of the year or increase rates altogether. Such a development could lead to the cryptocurrency market facing further corrections.
The cryptocurrency market seems to be stagnating, with Bitcoin (BTC) consolidating at the $114,000 level. How the market trajectory unfolds over the coming weeks is yet to be seen.