Bitcoin, the world’s leading cryptocurrency, is showing renewed vigor after a recent market dip, fueled by escalating expectations of a Federal Reserve interest rate cut as early as September. Analysts are increasingly drawing parallels to the central bank’s unexpected policy shift in late 2024, which famously propelled Bitcoin’s price to double by year-end.
The conviction among traders regarding an imminent rate cut has surged dramatically. According to the CME FedWatch Tool, which tracks market probabilities based on futures pricing, there is now an 80% chance of a September rate cut, a significant jump from just 40% observed last Friday. This shift gained considerable momentum following a weaker-than-expected US jobs report for July and the surprising resignation of Fed Governor Adriana Kugler.
Ms. Kugler’s departure presents President Donald Trump with a pivotal opportunity to influence the Fed’s composition by appointing a new governor who may advocate for a more accommodative monetary policy, such as former National Economic Council director Kevin Hassett. This potential reshaping of the Fed’s board, coupled with recent dissenting votes from two Fed officials against holding rates steady, signals a growing internal debate within the Federal Open Market Committee (FOMC).
Presto Research analysts Peter Chung and Min Jung highlighted the historical precedent, noting in a recent market brief, “Last year’s August growth scare spurred the Fed into a ‘catch-up rate cut rush’ from September to December, doubling Bitcoin’s price in the process.” This historical pattern, combined with renewed political pressure from President Trump on Fed Chair Jerome Powell, adds to the bullish sentiment in the crypto market.
The changing outlook has already sparked a modest recovery across digital asset markets, which saw over $150 billion wiped out last Friday. Bitcoin, after touching a three-week low of approximately $112.000 over the weekend, has rebounded to trade around $114.500 on Monday. Looking at historical data, particularly from Coinglass, September and October have often proved to be strong months for Bitcoin during previous easing cycles, providing further optimism for investors.
While Bitcoin has seen a 0,9% increase over the past 24 hours to trade at $114.560, Ethereum has also climbed, gaining 2,7% in the same period to reach $3.550. The crypto community remains keenly observant of upcoming economic indicators and Federal Reserve communications, as the prospect of lower interest rates continues to be a significant catalyst for digital asset valuations.
Disclaimer: This article is provided for informational purposes only and does not constitute financial advice. Investors should always conduct their own thorough research and consult with a qualified financial advisor before making any investment decisions in cryptocurrencies, which are highly volatile and speculative assets.
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