Wall Street is increasingly betting that the U.S. will cut rates before the end of 2025. At the same time, political pressure from Donald Trump is also increasing as he becomes more vocal in demanding Powell cut rates. As inflation eases and the market adjusts expectations, cryptocurrencies could benefit the most from loose monetary policy.
Trump Wants the Fed to Cut Rates by 1%
Earlier today, Trump continued to attack Federal Reserve Chairman Jerome Powell. He called for a 3 percentage point rate cut and claimed this would save the U.S. economy $1 trillion each year. The U.S. President also accused Powell of keeping interest rates high for 'political reasons'.
Although the Fed has kept interest rates at 4.25%–4.50% since June, speculation is increasing. Goldman Sachs now expects the first cut to occur in September. Meanwhile, market traders on Kalshi see a 40% chance of two cuts before the end of the year.
This change comes after inflation expectations in the U.S. sharply declined. Consumer expectations for one year dropped to 4.4% in July, the lowest since February. This figure marks a 2.2 percentage point decline in just two months - one of the largest two-month declines in history.
Long-term inflation expectations are also easing. The 5-year outlook has dropped 0.8 percentage points in the most recent quarter, currently at 3.6%. Overall, these trends suggest the Fed has more room to ease without raising concerns about inflation.
Bitcoin remains above $118,000, while Ethereum holds near $3,700. Both assets increased in value after the Fed cut rates, thanks to increased liquidity and investor risk appetite.
Could a Major Cryptocurrency Bull Run Begin?
Historically, rate cuts have triggered strong bullish markets for cryptocurrencies.
After the Fed cut rates in March 2020 during the COVID-19 crisis, Bitcoin surged from below $10,000 to over $60,000 in just one year. Ethereum also followed, supported by the growth of DeFi and NFTs.
If a new rate cut cycle begins in September, it could create similar conditions. Lower yields encourage investors to shift to riskier assets, including cryptocurrencies.
Capital can also shift from bonds and cash to Bitcoin, Ethereum, and other highly reliable cryptocurrencies.
Additionally, lower inflation expectations and improvements in regulatory transparency—such as the GENIUS and CLARITY Acts—could bolster investor confidence.
The convergence of these macro and policy signals could extend the current cycle beyond previous all-time highs.
However, timing is very important. Cryptocurrency has almost reached record levels, so the momentum may depend on the speed and extent of the cuts. A delayed or superficial response from the Fed could limit the upward momentum.
Important Days to Watch
The next Federal Reserve policy meeting will take place on July 29-30. Although the market does not expect any changes, the Fed's comments will be closely analyzed for signals about September.
The next important date is September 16-17, when the Federal Open Market Committee (FOMC) meets again. This is seen as the first realistic opportunity for a rate cut, especially if inflation continues to decline.
Other key indicators to watch:
July CPI print: Expected in early August, this information will shape expectations for the September decision.
Jackson Hole Symposium (August 22–24): Powell's speech here could significantly change the situation.
U.S. Jobs Report (August and September): Weak labor conditions could bolster the case for a cut.
For cryptocurrency traders, these days provide signals for potential market turning points. A confirmed rate cut by the Fed could trigger new buying pressure, particularly for Bitcoin, Ethereum, and highly liquid altcoins.
