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US Fed Poised To Cut Interest Rates By 0.5%, Bitcoin & Altcoins To Rally?

Published

3 months ago

September 3, 2024

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The US Fed is expected to announce a 50 bps rate cut at their upcoming meeting, following the crucial US Job data this week. According to Citi analysts, the US non-farm payroll data is expected to show 125,000 jobs have been added in August, with the unemployment rate at 4.3%. This data, as per the analysts, could aid the US central bank to move with a softer plan with their policy rate plans in September.

Having said that, the market watchers are anticipating a potential rally in Bitcoin and altcoin prices.

US Fed To Cut Rates By 0.5% After Job Data

According to a recent report citing Citi analysts, the focus of the US Fed has shifted significantly from tackling inflation to assessing the job market health. Recent estimates predict that the US economy added 125,000 jobs in August, with the unemployment rate holding at 4.3%.

This data, if confirmed, could pave the way for a more substantial rate cut of 50 basis points as the Federal Reserve aims to support a slowing labor market, the analysts predict. “The pivot from inflation to jobs is complete,” Citi analysts stated, emphasizing how employment metrics now play a crucial role in shaping Federal Reserve policy.

Meanwhile, this marks a notable departure from the central bank’s previous inflation-centric approach. Analysts suggest that current job growth levels, coupled with rising unemployment, point to a weakening economy, pushing the central bank towards easing monetary policy.

In addition, Citi’s report also highlights that small changes in job data could significantly impact Fed decisions. For example, if the US Job data shows that the unemployment rate edges down to 4.2%, the Fed might opt for a smaller, 25 basis point cut. However, with signs of a broader economic slowdown, Citi maintains its outlook for continued labor market weakening.

Bitcoin & Altcoins To Rally?

The anticipation of a bigger rate cut has fueled discussions over a potential rally in the broader financial market, including Bitcoin and the top altcoin prices. The lower rates usually bolster the market sentiment, raising the risk-bet appetite of the investors.

Having said that, the upcoming rate cut in September, along with two other rate cuts expected this year, could ease the concerns of the market participants. Notably, according to the CME FedWatch Tool, there is a 61% probability of a 25 bps rate cut by the US Fed in September. It marks a decline from 70% noted recently.

Meanwhile, the US 10-year Bond Yield fell 1.94% to 3.836 during writing. On the other hand, BTC price traded near the flatline at $58,111 at the same time, while the ETH price was down 1.7% to $2,463.

It’s worth noting that historical data suggests that Bitcoin usually delivers gloomy trading in September. Despite that, recent market trends and on-chain data indicate that BTC price could defy the historical trends, witnessing a positive trading scenario in September.