Contrary to broader expectations that cryptocurrencies would rally in the event of a rate cut by the Federal Reserve, the market has witnessed almost no reaction since the Federal Open Market Committee (FOMC) meeting ended.
Analysts at the market research firm Santiment already predicted that a rate cut larger than 25 basis points (bps) could trigger a big breakout. On the other hand, a non-rate cut outcome was expected to lead to a chaotic pullback. Neither scenario has played out, but analysts believe it is still too early to draw conclusions.
Fed Finally Cut Rates
On Wednesday, the Fed cut interest rates by 25bps, lowering the benchmark range to 4.00%–4.25%. This development has restarted the American easing cycle after a long hiatus.
Fed Chair Jerome Powell clarified that the rate reduction occurred not because inflation risk has decreased, but because economic growth and job creation appear softer.
Powell explained that there wasn’t a strong enough environment for a 50bps cut. However, predictions across the market suggest there could be additional easing this year. The outcomes of the seventh and eighth FOMC meetings, scheduled for October and December, could include up to 50 bps cuts.
Will BTC Rally in the Coming Months?
In the event of additional price cuts in the coming months, BTC could experience significant price action. While the market awaits, analysts say traders face a moderate level of risk in buying and adding bitcoins to their portfolios at this time. This is because BTC likely has more room to grow.
Over the last 30 days, average active BTC wallets have generated an average profit of 3.5% on their investments. In the past year, that figure has risen by 16.1%. With a possible straight path toward $120,000 in the coming weeks, driven by a favorable macroeconomic environment, analysts expect these wallets to amass more substantial profits.
Meanwhile, Santiment analysts noted a significant surge in social dominance during the FOMC meetings on Tuesday and Wednesday. This spike surpassed the social dominance of any other discussions about the FOMC or Powell. Such an increase has not been recorded since April, when President Donald Trump’s tariffs had a chokehold on financial markets.
“What does this huge social spike mean? Well, traders were particularly keyed in on this one, considering it would (and turned out to) be the first cut in nearly two years. And unlike the dozen or so past FOMC meetings, this one was finally the one that was finally anticipated to result in a change,” Santiment stated.
