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The broader crypto market has staged a strong rally today, gaining 4% to more than $4.10 trillion amid expectations of a 50bps Fed Rate cut during the FOMC meeting in September. With the US CPI numbers for July coming in lower than expected, expectations of Jerome Powell pivoting to quantitative easing (QE) are on the rise. While Bitcoin (BTC) price is up by a modest 1.5% to over $120,500, Ethereum (ETH) is leading the altcoin market rally with 30% weekly gains.
Crypto Market Rally Triggers $512 Million Liquidations
Following Tuesday’s US CPI data release, the crypto market staged a strong upside with the S&P 500 index making new highs. This has triggered a total $512 million in crypto liquidations in the last 24 hours, of which $380 million is in short liquidations, per the Coinglass data.
On hopes that Jerome Powell will announce Fed rate cuts in September’s FOMC meeting, crypto bulls are charging in once again. The U.S. federal debt has hit a record $37 trillion, intensifying concerns over rising deficits and the rising possibility of money supply expansion.
Analysts warn that servicing this debt could contribute to a surge in the global M2 money supply. This could serve as a catalyst for the Bitcoin price rally, moving ahead.
Jamie Coutts, chief crypto analyst at Real Vision, believes that if this trend persists, Bitcoin could surpass $132,000 by year-end. However, with the historical correlation, rising inflation, and expanding M2 money supply, the BTC price rally could extend further to $132,000.
Fed Rate Cut Chances Jump to 99% in September FOMC
With the July US CPI inflation numbers coming in less than the 2.8% expectations, all eyes are currently on Fed Chair Jerome Powell. Analysts anticipate a 25 bps rate cut in September, aligning with Trump’s calls for looser policy. The Fed can justify the move by citing a “weaker labor market,” despite strong inflationary pressure.
As per the CME Group data, the chances of a Fed rate cut in September have surged to 99%. After nearly five consecutive FOMC meetings with no rate cut, Powell could finally pivot during the next meeting.
If Powell refuses to pivot, US President Donald Trump will already be considering his replacement. The Trump administration is reviewing 11 potential candidates to succeed Federal Reserve Chair Jerome Powell when his term ends in May. Among the names under consideration are Jefferies Chief Market Strategist David Zervos, former Fed Governor Larry Lindsey, and Rick Rieder, BlackRock’s Chief Investment Officer for Global Fixed Income.
Treasury Secretary Scott Bessent Pitches for 50bps Fed Rate Cut
According to a Bloomberg report, Bessent suggested the Federal Reserve should remain open to a 50-basis-point rate cut after holding steady at its last policy meeting. He made the comments following the release of July inflation data, which he described as “incredible”. Furthermore, Bessent cited it as evidence that the Fed has room for a more aggressive policy move.
Bessent also expressed confidence that Stephen Miran, Trump’s nominee for the vacant Fed board seat and current head of the White House Council of Economic Advisers, will be confirmed before the September 16–17 policy meeting.
In the past, US President Trump has also demanded even higher Fed rate cuts to the tune of 300 bps. Trump is eager to flood the market with fresh liquidity and kickstart the economic engine. This could lead to a broader crypto market rally, kickstarting the next phase of the bull run.
