Expectations for Fed Rate Cuts Rise Again! Is the 'Liquidity Valve' in the Crypto Space About to Loosen?
Market bets are quietly adjusting, but the expectations for a rate cut in September and another one in 2025 remain strong, as the cryptocurrency market holds its breath in anticipation.
$BTC The Dawn of Liquidity: The Transmission Chain of Rate Cut Expectations in the Crypto Space
The Federal Reserve's interest rate policy has always been a core variable in the cryptocurrency market. Historical experience clearly shows that when the market forms clear expectations for rate cuts, risk assets often respond first.
Expectations of a Weaker Dollar: Rate cuts typically lead to a decline in the dollar's attractiveness. Once expectations of dollar depreciation form, the relative value of cryptocurrencies, such as Bitcoin, which are priced in dollars, gains support.
Lower Cost of Funds: Rate cuts mean lower borrowing costs, leading to a generally looser market liquidity. Funds seeking higher returns may more boldly flow into high-risk, high-volatility assets like cryptocurrencies.
Increased Risk Appetite: A loose monetary policy environment often boosts investors' tolerance for risk. Cryptocurrencies, as an emerging and highly volatile asset class, are particularly sensitive to changes in market risk sentiment.
The current market expectations for a rate cut in September and another one in 2025 are injecting a crucial 'liquidity expectation booster' into the crypto space.
