There is almost no suspense about the Federal Reserve's interest rate cut in September, but the internal divisions between hawks and doves will undoubtedly lead to significant market fluctuations before and after the meeting.
1️⃣ Short-term: Increased volatility
Doves in the lead → If a 25 basis point interest rate cut occurs in September as expected, coupled with weak employment data, and actual dollar interest rates decline, funds will seek hedging tools against depreciation—Bitcoin and Ethereum are likely to benefit first.
Hawkish disruptions → If hawkish figures (like Bowman) make strong statements, or if inflation data rebounds unexpectedly, doubts about the pace of interest rate cuts may arise, causing BTC and altcoins to experience rapid pullbacks.
2️⃣ Medium to long-term: Gradual easing + soft landing
Slow interest rate cut expectations → Most officials tend to favor moderate interest rate cuts, which will facilitate a gradual shift of funds from bonds to high-volatility assets, promoting continuous inflows to BTC ETFs and reviving speculative interest in altcoins.
Weak dollar cycle → Once the interest rate cut cycle begins, a weaker DXY will directly raise the dollar valuation of crypto assets, with high β assets like ETH and SOL potentially performing even better.
3️⃣ Institutional and regulatory undercurrents
Inter-market arbitrage → Wall Street funds may engage in cross-market arbitrage with interest rate futures and crypto assets, amplifying short-term liquidity.
Regulatory uncertainty → If the interest rate cut cycle is politicized, the independence of the Federal Reserve will be questioned, and crypto may get caught up in the discourse of 'anti-inflation' or 'de-dollarization', potentially facing temporary suppression from institutions like the SEC in the short term.
Key time points
September 6 Non-farm data → Rising unemployment rate = Pre-heating the interest rate cut situation.
September 18 FOMC meeting → If there are hawkish dissenting votes, there may be initial gains followed by a drop, which will then be supported by easing expectations.
In September, the crypto market will oscillate between 'interest rate cuts benefits' and 'internal struggles'. My judgment: BTC is likely to follow a 'rise then oscillate' pattern, while high-leverage DeFi and smaller coins must guard against liquidity withdrawal due to hawkish statements. As long as the U.S. economy does not experience a hard landing, the easing cycle will be a long-term reason for funds to enter.
