Recently, the crypto market has been betting on 'whether the Federal Reserve will cut rates in September'. Some are looking at ETH's new highs shouting 'rate cuts are definitely coming', while others are panicking over BTC's transaction fees saying 'the rate cut is in jeopardy' — but I need to pour a bucket of cold water: it's highly likely there won't be a rate cut in September, and it may even be a 'fall first, then deceive' script. After you see these three hard logic points, you’ll understand why!
1. Three solid reasons: There's no reason to cut interest rates in September
The Federal Reserve's rate cuts are never 'based on sentiment'; they have to look at economic data. The key data now all indicate 'no cuts':
Unemployment rate at 4.2%! So low there's no reason to save the market
The current unemployment rate in the US is 4.2%, at a historically low level — what does that mean? During the pandemic in 2020, the unemployment rate soared to 14.7%, and rates were cut to save the economy; now everyone has a job, consumption hasn’t collapsed, and companies aren’t mass-laying off employees. The Federal Reserve has no need to 'stabilize employment through rate cuts'. Just like if your salary hasn't dropped and you haven't lost your job, would you think of asking your boss for 'relief funds'? Clearly not.
Core PCE at 3.1%! Too far from the 2% target
The core inflation PCE most valued by the Federal Reserve is now at 3.1%, with a target of dropping below 2%. If rates are cut now, it would be equivalent to 'adding fuel to the inflation fire' — cutting rates will increase the money supply, and combined with the current trade tariffs, companies are likely to pass costs onto consumers, making it even harder to control inflation. Previously, Powell said 'a rate cut might happen', more like 'soothing the market', but if they really want to act, they must wait for inflation to come down concretely, and it’s clearly not the right time now.
The US stock market has a bubble! Cutting rates will only accelerate the crash
Right now, the Dow and Nasdaq are at high levels, and the bubble is obvious — if rates are cut again, funds will flood even more into the stock market, inflating the bubble further. Before the financial crisis in 2008, it was excessive easing that inflated the bubble, and the final burst triggered a chain reaction. The Federal Reserve cannot forget this; if they cut rates now, it equals 'actively igniting risks', and they won’t do such a foolish thing.
2. The only motivation for rate cuts: $35 trillion in debt, but Trump is already taking action
Some say 'The US has $35 trillion in debt, cutting rates can reduce interest expenses.' This statement is not wrong, but the problem is — cutting rates doesn’t solve the fundamental issue, unless it's below 1%, which would collapse the dollar's credibility, making it impossible.
Moreover, Trump has already responded to the debt with 'tariff measures': increasing government revenue through tariffs while forcing other countries to make concessions, thereby indirectly alleviating debt pressure. Compared to the 'significant side effects' of rate cuts, tariffs are clearly a 'safer choice'. So don’t expect the Federal Reserve to cut rates for the sake of debt; a $35 trillion pit cannot be filled with just one rate cut, and it might even get bigger.
3. The likely script going forward is: fall first, then deceive, the crypto market has to endure a wave.
Based on these signals, the next rhythm is likely to be as follows:
September: No rate cut, US stocks will fall first, and the crypto market will follow with a pullback
In September, the Federal Reserve will hold a meeting, likely announcing 'no rate cuts for now'. By then, US stocks will fall due to 'unmet expectations', and the crypto market, as a 'risk asset', will also collapse — BTC may retest $40,000, ETH may drop below $4,200, and altcoins need not be mentioned, as they will likely undergo a washout, trapping those who chased high.
October: Release rate cut news, harvest from the crypto space to fill the debt gap
Once US stocks and the crypto market pull back to a certain extent, the Federal Reserve will release news of 'possible rate cuts in November', attracting funds back into the crypto market. Once everyone FOMO's in, they will then use 'rate hike expectations' and 'negative data' to crash the market, harvesting retail investors, using the liquidity from the crypto market to fill the debt gap — this isn’t speculation; the Federal Reserve has used 'news manipulation' in previous cycles, and the playbook is already clear.
Strategies for cryptocurrency players
Don't bottom fish in September! Wait for a stable pullback
Now, whether it's BTC or ETH, don’t blindly increase your positions. If the Federal Reserve announces no rate cuts, the decline might be severe. Wait until it reaches key support levels (like BTC at $40,000, ETH at $4,000) before acting; don’t become a 'bag holder'.
Altcoins should reduce positions first! Avoid the first wave of decline
The previously mentioned altcoin season opportunity still exists, but there's a high probability of a pullback in September. If you have profitable altcoins, you can reduce your position by 30%-50% first, wait for a deeper drop before buying back, don’t let unrealized gains turn into actual losses.
Stay focused on the September Federal Reserve meeting! This is a key moment
The Federal Reserve's stance in the September meeting will set the tone for the next three months. If they clearly state 'no rate cut for now', decisively control your positions; if they speak ambiguously, don’t hold out hope, it's likely just 'wishful thinking', and the market will continue to drop.
Lastly, to be honest
The crypto market has always been 'following the Federal Reserve'. Don’t be misled by short-term market trends; look at the underlying logic. A rate cut in September is highly likely to be a 'bubble', and could instead mark 'the beginning of a pullback'. What we need to do now is not 'bet on rises', but rather 'guard against falls' — wait for this pullback to pass, and the opportunities in October will be more secure.
I will continue to monitor the Federal Reserve's latest statements and movements in the US stock market. If there’s any wind or grass movement, I will update in the fan group immediately. If you want to avoid the risk of a pullback in September and seize opportunities in October, following me is the right choice! We don’t gamble on market trends; we follow the trend, and steadily making money is the way to go!
