On June 6, benefiting from the mild cooling of the labor market, the Nasdaq index jumped 1% during the session, and Bitcoin surged more than 3%, both escaping the drag of the Twitter feud between Trump and Musk. In the two days following the releases of ADP and non-farm payroll data, Trump unusually called on Powell to cut rates quickly on social media four times in a row. Although Powell still ignores Trump's calls, the 'rate cut trade' has quietly become one of the hottest main themes at present.
According to federal interest rate futures pricing, the market expects the Federal Reserve to cumulatively lower rates by 45 basis points in the second half of the year (with a median expectation of cuts of 25 basis points in both September and December), in which the probability of the FOMC meeting in September initiating the first rate cut is 58% = (5 + 4 + 5.5) / 25. Notably, the CME FedWatch tool shows a stronger expectation for easing—the indicator shows that the probability of a cut of at least 25 basis points in September has risen to 62.4%, indicating that some traders are betting on earlier and more aggressive easing policies.
The market's heightened focus on the first interest rate cut is primarily due to the fact that, based on historical backtesting since 1990, the average cumulative interest rate cut within 12 months following the Federal Reserve's first cut has reached 175 basis points. Currently, interest rate futures pricing indicates that from September 2025 to December 2026, the federal funds rate is expected to be cumulatively lowered by 125 basis points, which means that the implementation of the first rate cut is equivalent to the start of a new round of easing.
Historically, declining interest rates have often become a catalyst for small-cap stocks and altcoins to strengthen. According to Jefferies data, since 1950, small-cap stocks have seen average gains of 11%, 15%, and 28% respectively at 3, 6, and 12 months after the Federal Reserve's first rate cut, all higher than large-cap stocks' 5%, 10%, and 15%. The better performance of small-cap stocks can be attributed to the following two main reasons:
1. Compared to large enterprises, small businesses generally have higher levels of debt. A rate cut helps lower borrowing costs, which means a reduction in financial costs and improved profit margins for small companies that rely on bank loans and floating rate debt.
2. The decline in interest rates has diminished the attractiveness of fixed-income products such as bonds and bank deposits, thereby driving funds towards high-risk, high-return assets, ultimately leading to an increasing market risk appetite.
Therefore, from July to August 2025, the Russell 2000 index and altcoins are expected to strengthen again. However, it is important to emphasize that the essence of this round of altcoin market is still a rebound from oversold conditions, and its intensity is likely to be weaker than the two major rebounds in 2024 (in March 2024, the median increase for the top 100 cryptocurrencies was 376%; in November 2024, the median increase was 404%). In a market characterized by token dumping supply and increasing institutionalization, 'altcoin season' is almost impossible to replicate. In a sense, the main role of the altcoin rebound is to provide an opportunity for historical trapped positions to exit gracefully.
In terms of asset selection, stablecoins are undoubtedly the direction with the highest certainty at present. On June 6, 2025, stablecoin 'first stock' Circle saw its intraday stock price reach $123, soaring nearly 300% from the IPO offer price of $31. Although its circulating market value briefly exceeded $28 billion, Circle's net profit for the entire year of 2024 was only $156 million. Such a high valuation premium largely reflects the market's strong recognition of the long-term development prospects of stablecoins and the RWA track.
On April 30, 2025, the Treasury Borrowing Advisory Committee (TBAC) submitted a report to the U.S. Treasury indicating that the market value of stablecoins is expected to grow from approximately $234 billion in April 2025 to $2 trillion in 2028, an increase of about 8.3 times. As the most important infrastructure for stablecoins, Ethereum currently holds a market share of 55%, with stablecoin trading accounting for 35%-50% of Ethereum's fee revenue. Assuming this ratio remains unchanged and trading volume grows in proportion to market value, Ethereum's stablecoin-related fee revenue could increase by 5-7 times by 2028, reaching between $12 billion and $16.8 billion.
In addition, Ethereum's market share in the tokenization market is as high as 81%. If the RWA market size grows from the current hundreds of billions to trillions of dollars, Ethereum, as the primary settlement layer, will also be able to generate substantial fee revenue. In other words, if the GENIUS stablecoin bill passes, the first project to gain value reassessment should be ETH.