Crypto experts are expecting the US Fed rate cut by 25 basis points in the next months, and the market has started to surge.
Crypto experts and enthusiasts anticipate two U.S. Federal Reserve rate cuts of 25 basis points each, one in November and another in December.
The crypto market appears to be responding with gradual but steady growth.
Meanwhile, the U.S. economy has outperformed expectations, as reported by the Bureau of Labor Statistics (BLS).
Despite the positive labor market data, the Federal Reserve is expected to continue its quantitative easing (QE) policy, which typically increases the money supply through debt.
This policy generally benefits the crypto market by driving more capital into cryptocurrencies.
Fed Rate Cuts Begin: Positive Signs for Crypto Investors
The Federal Reserve initiated the rate cut cycle in September with a larger-than-expected half-point reduction, committing to maintain low unemployment as inflation approaches its 2% target.
Over 100 economists predict further 25-basis-point cuts in both November and December. The crypto market has already shown slow but steady growth in response.
Additionally, the latest U.S. job data indicated that nonfarm payrolls for September rose by 254,000, surpassing market expectations.
Lower-than-expected unemployment rates have tempered market optimism, signaling that Bitcoin and altcoin prices may be poised for a more significant decline.
BlackRock’s CIO, Rick Rieder, has forecasted an additional 25-basis-point rate cut at this month’s FOMC meeting.
Generally, QE is a monetary policy that increases the money supply through debt, favoring crypto markets.
If the Federal Reserve injects liquidity into the economy, the resulting inflationary environment will lower bond yields, pushing investors to seek higher returns in speculative assets, including cryptocurrencies and stocks.
Lower interest rates are theoretically expected to drive investors away from safer assets like U.S. Treasuries and into higher-risk, higher-reward assets.
Typically, Fed rate cuts boost the prices of both Bitcoin and major U.S. stock indices.
However, the effects are always relative to the broader macroeconomic context, which includes national stability, currency sovereignty, and labor market conditions.
The Federal Reserve’s upcoming decision will shape the tone for the crypto market over the next few months.
If it leads to a period of increased liquidity without major disruptions, it could signal the beginning of a bull market.
What Does Jobs Data Mean for Future Fed Decisions?
Crypto market participants are not only interested in jobs data but also eagerly awaiting the upcoming U.S. Consumer Price Index (CPI) report, which is essential for assessing inflationary pressures.
The Federal Reserve closely monitors this data to gauge inflation levels, influencing its monetary policy decisions.
Market forecasts expect the CPI reading to drop from 0.2% to 0.1%, with inflation projected to fall from 2.5% to 2.3%.
According to Seema Shah, Chief Global Strategist at Principal Asset Management, “that monster upside surprise just erased any case for a half-point Fed rate cut in November.”
She added that with the Fed already easing, recession risks have diminished, though she cautioned that inflation remains a key risk, with policies now going in both directions.
Samuel Tombs, Chief U.S. Economist at Pantheon Macroeconomics, expressed a more conservative outlook.
He stated that the “strength of the 313,000 September payroll gain is very likely to be revised away,” pointing out that the response rate to the Labor Department’s survey was unusually low, with only 62% of businesses responding, compared to the usual rate of 77%.
David Russell, Global Head of Market Strategy at TradeStation, noted that the jobs report shows the economy does not necessarily require a Fed rate cut.
He added that while investors may have to adjust to fewer rate cuts, they will benefit from stronger incomes and consumer demand, which could be more beneficial for the stock market and the economy in the long run.
