Crypto Market Recovers: Predictions of September Fed Rate Cut

Ethereum (ETH) and other major cryptocurrencies also showed strong recovery. Analysts suggest that the anticipation of a Federal Reserve rate cut in September may support this upward trend. 

Federal Reserve Rate Cut in September? Experts Share Their Views 

Last week, Federal Reserve Chair Jerome Powell downplayed the need for rate cuts this year. At that time, only an 11% chance of a 50 basis point cut was expected at the Fed’s September meeting. However, recent market sell-offs have increased speculation about an emergency rate cut. 

According to CME data, there’s now a 75.5% probability of a 50 bps rate cut on September 18. Financial analyst Robert Prechter expects the Fed might act before the scheduled meeting. 

Despite this, emergency rate cuts are rare. The last one was during the peak of COVID-19. Economists argue that such a move now would indicate severe economic distress and suggest a major miscalculation by the Fed, potentially alarming investors. 

Crypto Market Turmoil and Factors Behind It 

BeInCrypto reported significant market turmoil yesterday. Coinglass data showed $1.06 billion in liquidations in the past 24 hours, with $901.33 million from long positions and $159.41 million from short ones. This spike occurred swiftly within five hours, rising from around $800 million. 

The drop was linked to recent macroeconomic developments. Weak US economic data last Friday fueled fears of a slowing global economy. The unwinding of the yen carry trade also impacted Japanese markets, alongside geopolitical tensions in the Middle East. In the crypto space, Jump Trading sold large amounts of Ethereum, adding to the market’s volatility and shaking investor confidence. 

Long-Term Strategies Recommended Amid Crypto Volatility 

Experts advise a long-term perspective in light of the crypto market’s short-term volatility. Bitwise CIO Matt Hougan highlighted the buying opportunities created by recent market swings. He suggested that tracking liquidation trends can help gauge market stability. 

Additionally, monitoring ETF flows can reveal investor sentiment, showing whether they are buying dips or selling off. Hougan stressed that focusing on long-term strategies is key, rather than reacting to short-term market movements.