Crypto Market Surges as Fed Rate Cut Speculation Spikes

Federal Reserve Chair Jerome Powell's recent statements, along with other signs of a probable policy shift, have fueled speculation that the central bank may decrease interest rates at its September meeting.

Potential Federal Reserve rate cuts have spurred renewed interest in Bitcoin and other risky assets. Historically, low interest rates have favored Bitcoin by enhancing liquidity and encouraging investment in high-risk assets. Recent FOMC minutes suggest future policy easing, which is favorable for cryptocurrencies. Bitcoin is experiencing volatility, with ascending expanding wedges indicating large price swings as it approaches key resistance levels.

Crypto Market Surges as Speculation Over Fed Rate Cuts Mounts

Statements by Federal Reserve Chair Jerome Powell, along with other indications of a possible shift in monetary policy stance, have fueled speculation that the central bank could cut interest rates at its September meeting. This optimism has been a major factor in the recent rally in bitcoin prices, indicating rising investor sentiment.

As the market awaits the next move by the Fed, all eyes are on upcoming speeches by key Federal Reserve officials. San Francisco Federal Reserve President Mary Daly will participate in a televised interview on August 26, followed by statements from Atlanta Fed President Raphael Bostic on August 28. These statements are expected to provide further clues on the Fed’s monetary policy stance.

Bitcoin price rose 1.8% to $61,500 on Friday, coming close to $62,000, after Federal Reserve Chair Jerome Powell hinted at an upcoming interest rate cut. Powell’s statements at the Jackson Hole Economic Policy Symposium highlighted the Fed’s commitment to adjusting rates in response to changing economic data, providing optimism for investors and contributing to the recent surge in bitcoin.

Ethereum and Solana prices also advanced, rising 2.7% to $2,675 and 2.1% to $145, respectively. Market sentiment remained upbeat amid expectations of the Fed resuming monetary policy easing, having maintained interest rates unchanged since July 2023, which benefited risk-on assets like cryptocurrency.

Meanwhile, the release of US Personal Consumption Expenditures (PCE) data will offer fresh indications on inflationary pressures. Economists expect the PCE inflation rate to come in at 0.2% for July, up from 0.1% in June, with the year-over-year rate at 2.5%. Core PCE figures are also set to show a slight increase to 2.7%. Any deviations from these expectations could potentially impact investor sentiment and market dynamics.

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