Crypto Markets Brace for Impact Ahead of Fed Rate Cut Decision
(MENAFN) As the U.S. Federal Reserve prepares to announce a possible interest rate cut during Wednesday’s Federal Open Market Committee (FOMC) meeting, the cryptocurrency sector is watching closely for its next big catalyst.
With inflation now dipping below 3% and signs of a weakening labor market, expectations are growing that the Fed will initiate its first rate reduction of the year. Market consensus points to a 25-basis-point cut, with projections of two more similar moves by the end of 2025.
According to media, Mustafa Batuhan Tufaner, associate professor of economics at Istanbul Beykent University, described the Fed’s current position as “a kind of dilemma” when it comes to lowering interest rates.
He explained that earlier hesitation stemmed from trade-related uncertainties. However, the recent uptick in jobless claims is increasing pressure on policymakers to act. Compounding that is direct pressure from President Joe Biden on Fed Chair Jerome Powell to reduce rates.
Although the immediate effects of a rate cut will be felt across traditional U.S. markets, digital asset investors are also on alert for any signals from the Fed.
“Cryptocurrencies will be positively influenced by a rate cut, but geopolitical developments will also influence this process,” said Tufaner.
Ahead of the meeting, Bitcoin is trading at approximately $115,000, while Ethereum hovers near $4,500.
“The start of the Fed’s easing cycle has been anticipated for some time by alternative investment investors. However, part of this expectation has already been priced in. Whether the rate decision is a one-off or part of a broader rate cut cycle will be key for cryptocurrencies,” he added.
Tufaner emphasized that while short-term crypto trends will largely hinge on monetary policy, the medium-term trajectory will depend heavily on emerging regulations—particularly those targeting stablecoins and tokenized securities.
He also pointed out that Türkiye is moving forward with its digital currency transition, with second-phase development currently in progress.
“As regulations and digital currency use become more widespread, the inflow of capital into crypto assets will accelerate,” he predicted.
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