Crypto Investors Have Nearly 100% Expectation of September Fed Rate Cut

Speculation over whether the Federal Reserve will lower interest rates this month has reached a new high, with cryptocurrency investors paying especially close attention.

Historically, rate cuts have often marked the beginning of strong rallies in digital assets and other riskier markets. With only a couple of weeks left before the next FOMC meeting, traders are already debating what decision the Fed will make and what that could mean for Bitcoin and the wider crypto market.

Data from the CME Group’s Fed Watch Tool currently shows the strongest odds yet of a rate cut happening this month. Throughout August, expectations fluctuated, with the probability surging past 92% at one point before sliding back to 75% as various headlines and market conditions shifted.

But as September began, optimism surged again, pushing the probability sharply higher. Sentiment has shifted dramatically, with the latest reading putting the likelihood of a September cut at 97.6%, the highest seen so far, fueling renewed talk of a crypto rally. That leaves only a small possibility—about 2%—that rates remain unchanged.

Meanwhile, the chance of a rate hike is effectively nonexistent, with no serious discussion of an increase for months. The narrative has been dominated almost entirely by when and how much rates will be reduced.

If the Fed does cut rates, it could provide a boost to both crypto and stocks. Cheaper borrowing costs often translate into investors feeling more comfortable taking risks, which increases liquidity and pushes asset prices upward. At the same time, it can heighten volatility, resulting in more dramatic price swings.

Crypto analysts believe that the market could respond strongly if a cut is confirmed, especially since President Donald Trump has been openly supportive of such a move. Still, there’s also a risk that expectations have already run too far ahead. When optimism gets this high, it sometimes sets the stage for disappointment.

Analytics firm Santiment recently noted that online discussions including the words “rate,” “cut,” and “Fed” have spiked to their highest point in nearly a year. That shows widespread anticipation, but it also raises the possibility of a classic “buy the rumor, sell the news” scenario. In such cases, asset prices climb ahead of the announcement and then tumble afterward if the reality doesn’t live up to the hype.

If that pattern repeats, the days leading up to the FOMC meeting could see strong gains in Bitcoin and other cryptocurrencies, followed by a correction if the Fed’s decision fails to match investor hopes.

Trading platforms like that run by Bullish (NYSE: BLSH) will be studying how trading activity shifts around the time the Fed conducts its scheduled meeting.

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