Fed Pivot Bets Grow as Goldman Sachs Calls September Rate Cut

Goldman Sachs said it expected the U.S. Federal Reserve to begin cutting interest rates in Sept., fueling bullish bets across crypto markets. The call added momentum to a growing wave of expectations for monetary easing after months of restrictive policy.

Goldman Sachs projected the first interest rate cut from the U.S. Federal Reserve would arrive in Sept., triggering a fresh wave of bullish positioning in the crypto market. The investment bank, which manages over $3 trillion in assets, updated its forecast after recent economic data hinted at softening inflation and cooling labor conditions.

The shift came after traders raised their bets on rate cuts. Data from CME Group’s FedWatch tool showed a 95 percent chance of a September cut as of Aug. 5. One week earlier, that probability stood near 55 percent.

Yields on short-dated Treasury bonds dropped as traders repositioned for easing. The two-year yield fell below 4.70 percent in Monday trading, its lowest level since early July.

Bitcoin price jumped to $115,000 after dropping to $112,300 over the weekend. Traders viewed the rate cut talk as a macro trigger for renewed risk appetite. The recovery mirrored a 4.7 percent drop that hit after the latest U.S. jobs report missed forecasts and raised recession concerns.

Ethereum price also rebounded. ETH traded above $6,280 after dipping below $6,000 for the first time in three weeks. That reversal aligned with declining open interest across ETH derivatives markets, indicating possible short squeeze pressure.

Traders Positioned for Fed Rate Cut Easing Cycle

Ash Crypto posted on X that there was now a 50 percent probability the Fed would cut rates three times in 2025. Just a week earlier, that forecast stood at 20 percent.

“The bond market is now pricing in multiple cuts starting September,” he wrote. “Giga bullish for risk.”

QCP Capital echoed that sentiment in a Monday update, saying the repricing of Fed expectations had accelerated risk-on trades across spot and options markets. The firm pointed to increased demand for call options on Bitcoin and Ethereum through Q4.

The potential pivot from the Federal Reserve came after nearly two years of aggressive tightening. Since March 2022, the Fed raised interest rates by more than 500 basis points to combat inflation. While inflation cooled from a 40-year high, core prices remained sticky, delaying the start of easing.

However, recent data gave the Fed room to move. The July nonfarm payrolls report showed 187,000 new jobs, well below expectations. Average hourly earnings rose just 0.3 percent month-over-month, easing wage pressure.

Unemployment remained steady at 4.1 percent, but labor force participation edged higher. Economists interpreted the data as a sign of a stabilizing labor market that could allow rate normalization.

Bitcoin Price Reacted to Yield Drop

The Bitcoin price bounced sharply after short-term bond yields fell. BTC traded at $115,000 by the end of Monday’s session, recouping much of its weekend losses.

That move came as traders responded to macro signals. Lookonchain flagged several whale inflows during the bounce, including a 680 BTC buy on Binance linked to a long-term accumulation address. Those flows supported the rebound.

Captain Faibik wrote on X that bulls needed to reclaim the $115,000 mark for further upside. He noted a potential bull flag breakout targeting $118,500 if volume confirmed the move.

Futures data showed liquidations during the weekend dip cleared excess leverage. CoinGlass reported over $1 billion in long liquidations across Bitcoin and altcoins, resetting funding rates to neutral territory.

Ethereum mirrored that trend. ETH open interest dropped by $430 million between Friday and Monday, according to Coinalyze. That decline suggested traders exited overleveraged long positions ahead of the macro news.

Focus Shifts to Jackson Hole and CPI

With rate cut odds rising, markets turned to upcoming economic events. The Jackson Hole Symposium, scheduled for Aug. 22–24, emerged as a potential flashpoint.

President Trump, who earlier criticized Jerome Powell’s inflation fight, said Monday he had narrowed down his pick to replace the Fed Chair. The news added political uncertainty to the central bank’s path.

Meanwhile, August’s Consumer Price Index (CPI) print, due on Aug. 13, may offer the next major clue. Traders expected headline inflation to slow to 3.1 percent year-over-year, down from June’s 3.3 percent.

If the CPI meets or underperforms forecasts, the case for a September cut could strengthen. However, a surprise beat might delay action.

The market reaction will depend on how Powell frames inflation risks during Jackson Hole. If the Fed Chair signals a dovish shift, risk assets could rally further. But if he warns that inflation remains sticky, crypto markets may pull back.

Fed Rate Cut: Macro Tailwinds Supported Bitcoin Price Rebound

The crypto market entered the second week of Aug. with renewed bullish momentum. Goldman’s call for a September rate cut amplified existing optimism around liquidity expansion and policy easing.

Bitcoin price reclaimed key levels after the $112,300 weekend low and faced resistance at $115,500. ETH also tested a major resistance zone near $6,300. Both assets traded in line with bond market repricing and political headlines around Federal Reserve leadership.

“Markets like this kind of clarity,” wrote analyst Ted Pillows on X. “A cut date on the calendar and a new Fed chair shortlist both reduce uncertainty.”

As traders waited for inflation data and Jackson Hole signals, the macro setup favored upside. That momentum could continue if the Federal Reserve confirms easing plans in the weeks ahead.