Stocks Rally on Fed Rate Cut Signals, Crypto Markets Watch for Spillover Effects

Equities surged after Federal Reserve Chair Jerome Powell hinted at potential rate cuts in September, with the Russell 2000 small-cap index jumping 4% to a 2025 high. Industrial and financial stocks led the charge—Caterpillar and Goldman Sachs both gained 4% on expectations of stimulated capital expenditures and construction activity.

While the article focuses on traditional markets, cryptocurrency traders are monitoring the macro implications. Lower interest rates typically weaken the dollar, creating favorable conditions for risk assets like Bitcoin and Ethereum. Blue-chip DeFi tokens such as AAVE and COMP often correlate with small-cap equity movements during liquidity surges.

Market strategists note that crypto-native sectors like real-world asset tokenization (highlighted by projects like ONDO Finance) could see accelerated adoption if lower borrowing costs increase institutional blockchain experimentation. The Fed's next policy decision on September 18 now serves as a key inflection point for both traditional and digital asset markets.