Wall Street Bets on Rate Cuts—Is Crypto Primed for a Historic Breakout?

Wall Street's sudden love affair with rate cuts has traders scrambling—but the real action might be happening off-exchange. As traditional markets pivot toward looser monetary policy, crypto's looking less like a speculative sideshow and more like the main event.

The liquidity domino effect

When the Fed flips the money printer back on, digital assets historically get first dibs on fresh capital. Bitcoin's 90-day correlation with liquidity measures just hit an 18-month high—smart money's already positioning.

Deflationary vs. inflationary plays

While fiat currencies race to the bottom, capped-supply cryptos suddenly smell like hedges. Never mind that most tokens still trade like risk assets—perception shifts fast when dollar debasement's back on the menu.

The institutional two-step

Goldman's crypto desk reportedly seeing 3x typical inflows this week. Funny how Wall Street discovers blockchain's virtues precisely when their own products look tired.

Market makers are loading up on gamma ahead of expected volatility—this could be the first rate cut cycle where crypto doesn't just participate, but leads. Whether that says more about digital assets or the sad state of traditional finance is... an exercise left to the reader.

Trump Wants Fed to Bring Interest Rate Down to 1%

Earlier today, TRUMP renewed his attack on Federal Reserve Chair Jerome Powell. He called for a 3 percentage point rate cut and claimed it would save the US economy $1 trillion annually. 

The US President also accused Powell of keeping rates high for “political reasons.”

Jerome Powell said that he will not cut interest rates, citing an inflation rate above 2.5% and tariff uncertainty.

Yet he cut them in December with a higher inflation rate, and pending tariffs.

Watch for an incoming Trump, Truth.

While the Fed has held rates steady at 4.25%–4.50% since June, speculation is rising. Goldman Sachs now expects the first cut to arrive in September. 

Meanwhile, traders on prediction market Kalshi see a 40% chance of two cuts before year-end.

This shift follows a steep drop in US inflation expectations. One-year consumer expectations fell to 4.4% in July, the lowest since February. That marks a 2.2 percentage point drop over just two months—one of the largest two-month declines in history.

Longer-term inflation expectations are also easing. Five-year outlooks dropped 0.8 percentage points in the last quarter, now sitting at 3.6%. 

Overall, these trends suggest the Fed has more room to ease without sparking fears of a price spiral.

The crypto market is paying close attention.

Bitcoin remains above $118,000, while ethereum holds near $3,700. Both assets have historically rallied after Fed rate cuts, benefiting from increased liquidity and investor risk appetite.

Americans’ inflation expectations are changing:

US consumers’ 1-year inflation expectations fell to 4.4% in July, the lowest since February 2025.

Over the last 2 months, expectations have declined 2.2 percentage points, marking one of the largest 2-month drops in history.

This… pic.twitter.com/GTbBWDzUN8

Could a Major Crypto Bull Run Begin?

Historically, rate cuts have kicked off strong crypto bull markets. 

After the Fed slashed rates in March 2020 during the COVID-19 crisis, Bitcoin soared from under $10,000 to over $60,000 within a year. Ethereum followed, supported by DeFi and NFT growth.

If a new rate cut cycle begins in September, it could bring similar conditions. Lower yields push investors toward risk-on assets, including crypto. 

Capital could also rotate from bonds and cash into Bitcoin, Ethereum, and high-conviction altcoins.

Additionally, falling inflation expectations and improving regulatory clarity—such as the GENIUS and CLARITY Acts—may reinforce investor confidence. 

This convergence of macro and policy signals could extend the current cycle beyond previous all-time highs.

However, timing matters. Crypto is already NEAR record levels, so momentum may depend on how fast and deep the cuts are. A delayed or shallow response from the Fed could limit upside.

Key Dates to Watch

The next Federal Reserve policy meeting will take place on. While markets expect no change, Fed commentary will be closely parsed for signals about September.

The next critical date is, when the FOMC reconvenes. This is widely seen as the first realistic window for a rate cut, especially if inflation continues to decline.

Other key indicators to monitor:

• July CPI print: Due early August, this will shape expectations for the September decision.
  
• Jackson Hole Symposium (Aug 22–24): Powell’s speech here could shift sentiment significantly.
  
• US Jobs Reports (August & September): Labor softness may strengthen the case for cuts.
  

For crypto traders, these dates offer cues for potential market inflection points. A confirmed Fed pivot could trigger renewed buying pressure, particularly in Bitcoin, Ethereum, and high-liquidity altcoins.