The Federal Reserve's meeting minutes suggest a rate cut in September, and BTC breaks through $61,000

Author: BitpushNews Mary Liu

On Wednesday, the minutes from the Federal Open Market Committee (FOMC) meeting in July indicated that if inflation continues to cool, most members of the Federal Reserve Board favor a rate cut in September.

The minutes revealed that at the July meeting, "the vast majority" of policymakers "believed that if the data continued to align with expectations, then easing policy at the next meeting might be appropriate." They also noted that "many" Federal Reserve officials believe the current stance on interest rates is restrictive, and "some participants" felt that keeping rates unchanged amid ongoing inflationary pressures would mean that monetary policy would increasingly weigh on economic activity.

The minutes boosted market sentiment, with traders betting that the first rate cut would come in less than 28 days (the next FOMC meeting is scheduled for September 18). The current debate centers on the magnitude of the first rate cut, with the FedWatch tool from the Chicago Mercantile Exchange showing a 64% probability of a 25 basis point cut and a 36% probability of a 50 basis point cut in September.

The latest data from the U.S. Bureau of Labor Statistics also raised hopes for a rate cut. Over the 12 months ending in March, non-farm payrolls are expected to decrease by 818,000, or about 68,000 per month. Aside from the total number, this report's revision to employment levels was 0.5%, the largest since 2009. The final revised data will be released early next year, but this suggests that the cooling of the labor market may take longer than most people expect.

According to Bitpush data, amid rising expectations for a rate cut, Bitcoin (BTC) rebounded to over $61,000, jumping from the support level of $59,500 to an intraday high of $61,865. As of the time of writing, Bitcoin is trading at $61,393, with a 24-hour increase of 3%.

Altcoins generally followed Bitcoin's rise, with 90% of the top 200 altcoins showing gains on Wednesday. Fantom (FTM) led the way with a 15.7% increase, followed by Compound (COMP) and Polygon (MATIC), which rose by 15.3% and 14.4%, respectively. Helium (HNT) was the biggest loser, down 4.6%, while cat in a dogs world (MEW) fell by 3% and Sui (SUI) dropped by 2.9%.

The overall market capitalization of cryptocurrencies is currently $2.15 trillion, with Bitcoin's market share at 56.2%.

In the U.S. stock market, major indices rebounded and rose after a midday decline following the release of the FOMC meeting minutes. By the close, the S&P 500 and Nasdaq 500 indices were up 0.42% and 0.57%, respectively, while the Dow Jones Industrial Average fell sharply before closing flat.

Analyst: Cautious Market Entry

Although the expectation for a rate cut in September is now established, market analyst Bloodgood warned that many will take this opportunity to inject FUD (fear, uncertainty, and doubt) into the market, and investors should approach macro news rationally.

Bloodgood stated, "With less than a month until the September FOMC meeting, a rate cut is basically a done deal; the only question is whether the cut will be 25 basis points or 50 basis points. Based on the current implied probabilities in the futures market, the likelihood of a single rate cut is about twice that of two cuts. But there is no doubt that the long-awaited turning point has finally arrived, and you will soon see people confidently stating that this is actually a market disaster because recessions typically occur after the start of a rate-cutting cycle."

Bloodgood explained, "When you see these overly confident statements, keep the following in mind: First, how the market reacts largely depends on whether these rate cuts are seen as a desperate attempt to fix a severely damaged economy or as a way to stimulate growth after a soft landing. Secondly, the key phrase is often; recessions tend to occur after the start of a rate-cutting cycle, but this probability (if we look back at rate-cutting cycles since 1970) is about 60%, not over 90%."

Bloodgood believes, "Last but not least, even during periods when a recession does occur, the S&P 500 index tends to remain higher for most of the following year. Overall, it is wise to be cautious about recession news."

From the weekly chart of Bitcoin, Bloodgood noted that Bitcoin is currently in an accumulation zone but shows no clear signs of where it will head next. He said, "From a broader perspective, we still see a bearish structure, so there is nothing new here—unless we make a higher high, there is no hope for continuation. Each upward movement will be tested on the downward trend line, so make sure not to enter the market too early."

Legendary trader Peter Brandt stated on the X platform that the BTC/GLD ratio shows Bitcoin's price relative to gold, with the ratio currently at 23.4. BTC is still below its 2021 peak, and the ratio has room to decline below 20, needing to break above 32.5 to declare that BTC/GC is in a bullish trend.