Crypto Market Braces for Bull Run as Fed Rate Cut Probability Nears 100%

Anticipation is at an all-time high among crypto investors as the Federal Reserve’s September meeting approaches, with expectations for a rate cut reaching near certainty. Historically, such cuts have often ignited bull runs in risk assets, signaling a crucial period for the cryptocurrency market.

Fed Rate Cut Looms with Over 97% Certainty

The CME Watch Tool, a key indicator for market sentiment on Federal Reserve decisions, now shows a staggering 97.6% probability of a rate cut in September. This figure marks the highest likelihood recorded so far, indicating a strong consensus among market participants. While August saw some fluctuations, with probabilities dipping to 75% at one point, September has brought a definitive shift towards a bullish outlook. This leaves only a 2.4% chance of rates remaining unchanged and a 0% chance of a hike, underscoring the market's firm conviction that a cut is imminent.

Navigating Potential Volatility and a "Buy the Rumor, Sell the News" Scenario

A Fed rate cut typically fuels both stock and crypto markets by increasing liquidity and encouraging investors to embrace higher-risk assets, leading to rapid price appreciation. However, this bullish sentiment also brings heightened volatility. On-chain data analysis from Santiment reveals social media conversations around "Fed," "rate," and "cut" are at a nearly one-year peak, signaling widespread optimism. Yet, such periods of extreme anticipation can often precede a "buy the rumor, sell the news" event. Should the actual FOMC announcement diverge from the current high expectations, the crypto market could experience a sharp reversal following an initial pre-meeting rally. Investors are advised to exercise caution and prepare for potential market swings.