Fed Rate Cut Decision Looms Sept 17, Altcoin Rally in Spotlight

Key Insights:

• The Fed rate cut decision could happen on September 17th.
• Jerome Powell hinted at this in his address at the Jackson Hole Symposium.
• An altcoin rally could trigger when the Fed cuts interest rates.

The closely watched Fed rate cut decision is looming. This move could trigger a Bitcoin and altcoin rally, as has happened in the past. Thus, the current dip looks like a good time to accumulate quality tokens.

Why a Fed Cut is Possible in September?

The recent economic numbers from the United States show an economy that is slowing or, at worst, facing stagflation.

A report by the Bureau of Labor Statistics (BLS) showed that the country’s labor market was doing worse than previously thought. It downgraded the May and June jobs numbers, showing that the economy created an average of 35,000 jobs. That’s the worst reading since the pandemic.

The same report showed that the economy created 73,000 jobs in July, which will likely be revised downwards once the bureau gets all the feedback from employers.

Even these job additions were not all that good, as most of them were in the healthcare sector, with manufacturing continuing to deteriorate. Also, the data revealed that the unemployment rate rose to 4.2% in July.

American employers are concerned about Donald Trump’s tariffs, which have continued rising in the past few months. On Wednesday, August 27, the US started implementing a 50% tariff on Indian imports.

Therefore, in most cases when there are these issues, companies remain on the sidelines as they wait for more clarity on policies.

At the same time, tariffs have pushed companies to raise prices in the past few months, leading to stubbornly high inflation. The closely-watched core consumer price index (CPI) has jumped to 3.1%, while the producer price index (PPI) has soared to 3.7%.

These numbers have moved further above the Federal Reserve target of 2.0%.

Jerome Powell Hinted at a Fed Interest Rate Cut

When faced with rising inflation and unemployment rates, the Federal Reserve will always choose a side. In his Jackson Hole Symposium speech last week, Jerome Powell hinted that the Fed will now focus on the labor market and cut interest rates.

Most economists and traders now expect that the Fed will deliver a 0.25% cut in its September meeting, the first time it has done that this year.

Odds of a cut have jumped to 78% on Polymarket and to 80% on the CME Fed Futures tool.

Most importantly, the Fed will continue to cut in 2026 as Donald Trump could make some key changes then. He will replace Jerome Powell, possibly with an economist who believes in cutting interest rates.

Trump is also attempting to reshape the Fed into his image. Just this week, he announced that he was firing Lisa Cook, one of the Fed’s governors, who has vowed to sue to keep her job. Having a majority of governors in the Fed would give him more say, including removing some regional officials.

Could Fed Rate Cut Stimulate an Altcoin Rally?

A Fed interest rate cut may stimulate an altcoin rally as it has done in the past. In an X post, Crypto Rover noted that the market cap of all altcoins jumped to over $1.16 trillion from $554 billion three months after the Fed started cutting interest rates in the last September.

The same surge happened during the pandemic when the Fed slashed interest rates to near zero to stimulate the economy. After their initial plunge, most cryptocurrencies rebounded after the rate cut and reached their all-time high in 2021.

Most importantly, the crypto market crashed in 2022 as inflation jumped to a 40-year high. It pushed the Federal Reserve to hike interest rates aggressively.

Crypto and the stock market boom when the Fed is cutting rates because it normally makes fixed income less attractive with the bond yields falling.

The crypto rally could also be triggered by the potential approval of spot altcoin exchange-traded funds (ETFs) by the Securities and Exchange Commission (SEC). Most analysts expect these approvals to start happening in October when the deadline of some of these funds arrives.