- Bitcoin and crypto prices rose sharply this week, with the market recovering to $4 trillion.
- Bitcoin set a new all-time high of $123,000 per coin last month.
- JPMorgan expects the U.S. Federal Reserve to cut interest rates in September by 25 basis points.
- The market sees a 90% chance of a rate cut, echoing the conditions that led to bitcoin’s strong rally in late 2024.
- President Donald Trump’s actions and a possible new Fed board member may influence upcoming policy decisions.
Crypto markets experienced a significant rebound this week, with overall valuations climbing to $4 trillion after a recent downturn. Prices for bitcoin and other cryptocurrencies increased as the market recovered from concerns of a potential crash.
Last month, bitcoin reached a record high of $123,000 per coin. Traders linked the surge to speculation that asset manager BlackRock could have a major impact on the market.
Analysts at JPMorgan announced this week that they predict the U.S. Federal Reserve will lower interest rates in September. In a note reported by Reuters, JPMorgan’s Michael Feroli stated, “For [Fed chair Jerome] Powell, the risk management considerations at the next meeting may go beyond balancing employment and inflation risks.” The bank expects a reduction of 25 basis points, citing slowed job growth and the nomination of Stephen Miran to the Federal Reserve board by President Donald Trump. Miran is considered a supporter of lower interest rates.
According to JPMorgan, additional dissents may occur within the Federal Reserve if Miran is confirmed before the next meeting. Feroli noted that a continued weakening labor market may prompt a bigger rate cut of 50 basis points.
The CME Fed Watch tool now shows a 90% probability of a September rate cut, creating a scenario similar to the one that preceded bitcoin’s late 2024 rally. In August last year, a slowdown in economic growth prompted the Fed to begin a series of rate cuts, which coincided with bitcoin doubling in price. Presto Research’s Peter Chung and Min Jung wrote in a recent note, “The current setup feels eerily similar.”
While Federal Reserve chair Jerome Powell has faced rising pressure from President Trump to act on interest rates, some experts say the approach to future rate decisions may shift, especially if new board members are confirmed. The original series of cuts last year took markets by surprise and triggered substantial gains in the crypto sector.
Additional factors such as labor market performance and upcoming changes to the Federal Reserve leadership may continue to impact expectations for both interest rates and the cryptocurrency market.
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