Introduction

This report analyzes the potential impact on the cryptocurrency market if the Federal Reserve does not begin to cut interest rates before the end of the third quarter of 2025 (September). We will explore five aspects: macroeconomic background, historical data, market expectations, potential impacts, and mitigating factors, aiming to provide comprehensive insights for investors and market participants.

Current economic and monetary policy background

As of March 19, 2025, the federal funds rate is around 4.50%. According to historical data from Forbes Advisor, the market previously anticipated that rate cuts might begin in June. However, if the Federal Reserve delays rate cuts until after September, it would mean that rates remain elevated for a longer period. Recent economic data shows that inflation pressures may still be above the Federal Reserve's 2% target, and the job market is performing strongly, which may prompt the Federal Reserve to maintain high rates to control inflation.

Historical data and precedents

  1. Historical data shows that the Federal Reserve's interest rate policy has a significant impact on risk assets. During the rate hike cycle from 2018 to 2019, the cryptocurrency market experienced significant declines; after rate cuts in 2019, the market recovered somewhat. In the 2022 rate hike cycle, Bitcoin's price fell from its peak to its trough, demonstrating the suppressive effect of a high-interest-rate environment on the crypto market. According to Bankrate's analysis, rate cuts typically increase market liquidity, benefiting risk assets, while rate hikes lead to capital outflows.

Market expectations and potential responses

The market currently has high expectations for rate cuts in 2025; according to an analysis by Investopedia, some investors anticipate the first rate cut in June. If the Federal Reserve delays rate cuts until after September, unmet market expectations may lead to the following reactions:

  1. Price volatility: Investors may trigger short-term sell-offs due to disappointment, and mainstream cryptocurrencies such as $BTC and $ETH may experience a 10%-20% correction.

  2. Capital outflow: Institutional investors may reduce their allocation to crypto assets and shift towards lower-risk assets such as bonds.

  3. Declining trading volume: Market sentiment may turn cautious, resulting in reduced trading activity and lower liquidity.

Additionally, higher interest rates may increase the opportunity cost of holding cryptocurrencies, leading investors to prefer higher-yielding safe assets. The correlation between cryptocurrencies and traditional markets has increased, and if tech stocks decline due to high rates, the crypto market may be pressured in tandem.

Mitigating factors and market resilience

Although high interest rates may pose challenges, the following factors may mitigate negative impacts:

  • Technological advancements: Developments in blockchain technology, such as the expansion of smart contract platforms and DeFi applications, may attract new investors. According to Forbes Advisor's best cryptocurrencies for 2025, platforms like $SOL and TRON are receiving attention due to their high transaction speeds and application potential.

  • Regulatory support: If the regulatory environment improves, such as through institutional adoption of cryptocurrencies or promotion of ETFs, it may drive market recovery.

  • Market resilience: Historical data of the crypto market shows its ability to recover after short-term volatility, particularly when the economic environment improves or expectations for rate cuts rise.

Conclusion and outlook

If the Federal Reserve does not begin to cut interest rates before September 2025, the cryptocurrency market may face short-term price corrections and increased volatility, and investor risk appetite may decline. However, the long-term impact depends on economic performance and technological developments. If the economy remains stable, advancements in blockchain technology may drive market recovery; if recession risks intensify, the crypto market may enter a bear market. Investors are advised to closely monitor inflation data, the job market, and the performance of tech stocks, while adopting a diversified investment strategy to manage risk.#内容挖矿