Crypto Boom Imminent? Major Banks Predict At Least 2 Rate Cuts Following Weak Labor Data

Wall Street's crystal balls are flashing green for crypto as banking giants pivot toward monetary easing.

The Rate Cut Catalyst

Weak labor numbers just handed the Fed exactly what it didn't want—another reason to ease up. Two projected cuts now sit on the table, and traders aren't waiting for the fine print.

Liquidity On The Horizon

Cheaper money means hotter markets. Digital assets thrive when yield chasers get desperate—and let's be honest, traditional finance hasn't exactly been printing excitement lately.

Bankers Playing Catch-Up

Even the suits see it coming. After years of dismissing crypto as a 'novelty,' now they're repositioning portfolios like it's 2021 all over again. Funny how weak data suddenly makes alternative assets look so… institutional.

Timing The Tide

Markets move fast—especially when central banks start blinking. If history's any guide, crypto doesn't wait for invites. It kicks down the door.

Weak Labor Data Increases Likelihood Of Rate Cuts: Major Banks

The US labor market data released on Friday was weaker than expected, as only 22,000 jobs were added to the economy in August, falling short of the 75,000 job expectations. Major banking firms have now come forward with how this new report could impact the outcome of the Federal Open Market Committee (FOMC)’s meetings in the coming months.

According to a Bloomberg report, Bank of America analysts have softened their stance on no interest rate cuts in 2025 as a result of Friday’s labor data release. The analysts now expect the Fed to cut rates at least twice before year-end—two 25 basis points (25BPS) cuts in September and December 2025.

Meanwhile, analysts at investment banking behemoth Goldman Sachs are projecting three 25BPS cuts before the year runs out. The first interest rate cut is expected to occur in September, with two additional cuts anticipated in October and November.

In a separate Reuters report from June, Citigroup had always expected three 25BPS cuts in the remaining months of the year. However, unlike Goldman Sachs, the banking titan projects these interest rate cuts to September, October, and December.

How Successive Rate Cuts Could Catalyze Crypto Bull Run

Lower interest rates have always been viewed as a positive macroeconomic indicator for the risk assets, including the crypto market. With fixed-income assets becoming less attractive, investors tend to have a risk-on attitude towards the riskier assets.

Hence, periods of low interest rates or rate cuts have often been associated with an increase in crypto prices and sustained bullish runs. Meanwhile, higher rates tend to lead to a decline in crypto liquidity, as investors are less incentivized to enter the market.

According to data from CoinGecko, the total crypto market capitalization stands at around $3.09 trillion, reflecting an over 1% decline in the past day.