"When the trumpet of interest rate cuts sounds, will the crypto market take off?" - The storm of the Federal Reserve's September rate cut is coming. Is your wallet ready?

Folks, in the realm of finance, the Federal Reserve is like the 'master of the martial arts world'. When it takes action, the global market trembles. Recently, a dismal non-farm employment report completely rewrote the Federal Reserve's interest rate script! According to the latest data from CME's 'FedWatch', the probability of a September rate cut skyrocketed to 94.4% overnight, while the probability of maintaining the interest rate has dwindled to a paltry 5.6%. This rate cut is basically a done deal!

Why did market expectations change overnight?

Let's first chat about why the market expectations changed suddenly. First, the non-farm data was practically a 'nuclear bomb'. In July, the U.S. added only 73,000 jobs, far below expectations, and the data for May and June was significantly revised downwards. The signs of a cooling labor market are too obvious, like winter arriving, everyone bundled up in thick coats, and the market felt this 'chill'.

Secondly, the probability of interest rate cuts has skyrocketed faster than a rocket. A month ago, the probability of a September rate cut was only 6.3%, a week ago it rose to 82.6%, and now it has directly surpassed 94.4%. This speed is simply jaw-dropping, creating a historic leap!

Additionally, there have been personnel changes at the Federal Reserve, with Governor Quarles suddenly resigning, and Trump wanting to appoint a trusted candidate in advance. The market speculates that the policy stance may shift towards easing, like a great drama with a sudden plot twist that catches everyone off guard.

The Federal Reserve's 'interest rate cut dilemma'

Currently, the federal funds rate is maintained at 4.25% - 4.50%, having remained unchanged for four consecutive times. However, this 'high interest rate fortress' is being gradually breached by economic data. In the June meeting, the dot plot showed a significant division, with 8 officials supporting two rate cuts within the year, while 7 insisted on no rate cuts, creating a historic level of disagreement, like a group of people discussing matters with completely unified opinions.

Powell is also troubled; he stated, "If it weren't for Trump's tariffs, we might have already cut rates." These tariffs are like a naughty child, pushing up inflation while suppressing growth, leaving the policy path shrouded in fog. Moreover, the Federal Reserve has lowered its GDP growth forecast for 2025 and raised the unemployment rate, while PCE inflation expectations have also increased. The economic situation feels like a ship sailing in a storm, on the verge of capsizing.

The impact of interest rate cuts on the crypto market - my views and cases

So what impact will this rate cut have on the crypto market? Let me tell you, the impact is huge! An interest rate cut means there will be more money in the market, liquidity will ease, and capital will be like a pack of hungry wolves, seeking investment opportunities everywhere. The crypto market, especially risk assets like Bitcoin, is like a piece of juicy meat, sure to attract a massive influx of capital.

Take the previous rate cut cycle as an example; after the Federal Reserve cut rates, Bitcoin's price skyrocketed like a rocket. Many traders seized this opportunity and made a fortune. This time is no exception; traders are betting that liquidity easing will propel Bitcoin and other risk assets to soar, with some even proclaiming that "trillions of dollars will flood into the market."

Moreover, interest rate cuts will also affect investor psychology. When everyone knows that money will become more abundant, they will be more willing to take risks in investments, and the heat in the crypto market will rise accordingly. It's like a lively party; the more people there are, the more vibrant the atmosphere, and everyone enjoys it more.

Now, the FOMC meetings on September 17 and October 29 are like two battles that will determine the fate of the crypto market. If the rate cut happens, U.S. stocks could rebound sharply, and the crypto market will be ready to take off, resulting in a revaluation of global assets.

Folks, this financial feast has already begun. Do you want to sit on the sidelines and watch the excitement, or do you want to rush in and make a fortune? I am Shence, a crypto blogger, and I will continue to bring you the latest market trends and analyses. Remember to follow me so you don't miss any exciting moments of this wealth feast! Let's ride the waves in the crypto market together and reap abundant rewards!