The cryptocurrency market can stand before a breakthrough moment. Scott Bessent, Secretary of the US Treasury, publicly called on a federal reserve to consider a reduction of interest rates by 50 base points in September, citing poor employment data and optimistic inflation indicators.
Economic data drive speculation
The latest reviews of employment data turned out to be much worse than initially estimated. The American Office of Labor Statistics has reduced its estimates for May and June by a total of 258,000 jobs. This is a drastic correction, which in the Bessent’s opinion justifies a more aggressive monetary policy.
- Inflation in July amounted to 2.7% year on year
- The result slightly exceeded the expectations of economists
- The data still support the narrative about the possible loosening of FED policy
In an interview with Fox Business, Bessent said:
If we had original numbers, we could cut our feet in June and July
The crypto reacts quickly
Digital assets markets reacted immediately for speculation regarding deeper interest rate discounts. Ethereum is on his way to new historical Maksa, while Bitcoin also recorded significant increases.
Ryan McMillin, main investment director of the Merkle Tree Capital fundcommented on the matter in this way:
A reduction of 50 base points would confirm the moods that condemned the risk of the rest of the year
Why do cryptocurrencies react so hard to changes in interest rates? The mechanism is simple:
Lower interest rates = lower loan costs = greater tendency to invest in risky assets = increase in cryptocurrency prices.
Market analysis indicates cautious optimism
Despite spectacular increases, analysts are moderate. Option market activity shows that investors are still preventing inheritance protectionespecially in the third quarter.
Historical statistics do not fill with exaggerated optimism – The average return in the third quarter of the last 12 years was only 0.96%. Seasonal trends can therefore limit the current bull market.
What next? Key factors for analysis
Although the likelihood of a reduction of 25 base points in September is already “certain,” Fed still has to analyze further data on employment and inflation.
Key risks for crypto:
- Macroeconomic uncertainty
- Development of the commercial and tariff situation
- Seasonal market trends
- Variability of influx to ETFs
Is a supercyl in the cryptocurrency market ahead of us?
Bessent interview can mean the start of a new cycle for cryptocurrencies. If the Fed actually decides on a more aggressive reduction of the feet, digital assets can experience an extended bull market driven by escaping capital from traditional low -water instruments.
However, investors should remember about the cyclical of crypto markets and do not underestimate the potential macroeconomic risks in the coming months.
