Fed Rate Cut Priced In, Bitcoin Eyes Powell Comments

With a 96% probability of a quarter-point rate cut priced into markets, according to the CME’s FedWatch tool, financial participants from traditional equities to crypto assets have largely digested the anticipated move. This widespread expectation has already fueled a rally across risk assets this week, with Bitcoin climbing nearly 5% to approach $116,559 and Ethereum and XRP posting gains of 4.8% and 3%, respectively. Solana led the pack with a 10% surge, partly driven by expansion in its treasury operations.

Juan Leon, Bitwise’s senior investment strategist, emphasized that the cut itself is no surprise. “It does seem to be pretty priced in,” he told Decrypt. “[A cut] has been digested by the markets. Where it gets interesting is what Powell says afterwards—that’s where you’ll see crypto markets flatten out or rally.” This sentiment is echoed across trading desks, where the focus has shifted from the rate decision to the forward guidance that will follow.

Federal Reserve Chair Jerome Powell’s comments post-announcement are poised to be the primary driver of market sentiment. Investors will scrutinize his language for hints on future rate policy, inflation concerns, and economic outlook. The Fed has held rates steady between 4.25% and 4.50% since December, citing persistent inflation above its 2% target. However, recent jobs data—including a significant downward revision of 911,000 jobs over the past year—has heightened expectations for monetary easing.

Samantha Bohbot, Chief Growth Officer at Rockaway, noted, “Lower interest rates increase the liquidity in circulation, and investors deploy capital into more risky assets such as stocks and crypto.” Conversely, she warned that “any hawkish comments might lead to repricing and sell off.” This dynamic places Powell’s rhetoric at the center of potential market volatility, with crypto assets particularly sensitive to shifts in liquidity expectations.

Complicating the Fed’s decision-making process is political pressure from President Donald Trump, who has campaigned aggressively for rate cuts and recently attempted to remove Federal Reserve Board member Lisa Cook—a move blocked by a federal appeals court on Tuesday. This incident raises questions about the Fed’s independence amid broader macroeconomic uncertainties, including ongoing trade tensions.

These factors have left investors unbalanced, driving flows into traditional safe havens like gold, which hit a record high above $3,730 this week. Carlos Guzman, a research analyst at GSR, suggested that surprises remain possible: “The Fed could still surprise markets by opting for a 50bps cut rather than the overwhelmingly expected 25bps,” which could propel Bitcoin and other cryptos significantly higher.

Despite the rally, Bitcoin remains about 7% below its August all-time high of $124,128. A Myriad market survey found nearly 90% of consumers expect prices to stay above $105,000 through September, reflecting cautious optimism. As the Fed meeting unfolds, all eyes will be on Powell’s tone—whether dovish, hawkish, or nuanced—and its implications for risk assets in an increasingly complex economic landscape.