Bitcoin News Today: Fed Rate Cut Odds Near 90% as Inflation Holds at 2.7% and Markets Rally

Recent developments suggest that the Federal Reserve is increasingly leaning toward a rate cut in the coming months, triggering positive reactions across both traditional and emerging financial markets. A series of inflation reports and economic indicators have fueled speculation that the Fed may ease monetary policy to support a slowing labor market and moderate price pressures. Investors are now pricing in a high probability of a cut, with expectations peaking around September [1].

The latest inflation data, released on August 5, 2025, showed headline inflation holding steady at 2.7% annually, below expectations that had factored in higher inflation due to ongoing supply chain disruptions and potential tariff impacts [2]. This benign inflation print strengthened the case for a Fed rate cut, with market participants revising their forecasts accordingly. As a result, U.S. Treasury yields dropped, particularly in the short-term segment, as investors anticipated a more accommodative monetary stance [3].

Money markets are currently pricing in a 90% chance of a Federal Reserve rate cut in the next month, according to futures data. This probability climbed to 91% by July 31, according to CME Group data, indicating a growing consensus among traders that the Fed will act soon [4]. The dollar weakened against major currencies like the euro, reflecting reduced demand for U.S. assets as investors shifted money into higher-yielding alternatives [5].

The optimism is not limited to traditional financial assets. The crypto market also saw a surge, with traders interpreting the Fed’s potential easing as a tailwind for risk assets. Lower interest rates typically reduce the cost of capital, encouraging investment in speculative markets like cryptocurrencies [6].

On August 13, U.S. stock markets hit new highs following expectations of a Federal Reserve rate cut in September, spurred by recent inflation data. The Nasdaq 100 and S&P 500 indices both reached all-time highs, reflecting the market’s bullish sentiment [1]. The possibility of rate cuts has been supported by Federal Reserve Governor Michelle W. Bowman, who emphasized recent labor market data as a factor for potential reductions. “The latest labor market data reinforce my view for three cuts this year,” Bowman stated in her speech [2].

Bitcoin (BTC) commands a dominant position in the crypto market, reflecting a market cap of $2.39 trillion, supported by CoinMarketCap data. Gaining 1.1% over 24 hours, its 24-hour trading volume reached $72.85 billion. BTC’s circulating supply stands at 19.9 million against a maximum supply of 21 million. Coincu researchers indicate that the anticipated policy shift may drive liquidity and technological adoption, should BTC maintain its current path. Historical trends suggest a potential uptick in decentralized finance (DeFi) and blockchain usage patterns, echoing previous easing cycles [1].

A potential rate cut could ease financial conditions, impacting equities and cryptocurrency markets, as observed in past monetary easing cycles. In the 2019 rate-cut cycle, cryptocurrencies, led by Bitcoin, saw increased liquidity and investor engagement, illustrating potential parallels to current market dynamics [1].

Despite the growing confidence in a rate cut, analysts remain cautious about the potential side effects. Lower interest rates could stimulate economic growth and support job creation, but they also carry the risk of rekindling inflationary pressures. With the labor market showing signs of weakening, the Fed faces a delicate balancing act between fostering growth and maintaining price stability [1].

Overall, the convergence of favorable inflation data, a softening labor market, and shifting market expectations has created a strong case for a near-term rate cut. Investors across Wall Street and the crypto markets are closely watching for any additional signals from the Federal Reserve that could confirm or adjust these expectations [1].

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Source:

[1] title: Wall Street Weighs Up Odds of a Rate Cut (url: https://www.wsj.com/livecoverage/cpi-report-today-inflation-stock-market-08-12-2025/card/lokQ6PuOb4Cq0rxAI9XU?gaa_at=eafs&gaa_n=ASWzDAgtPMQ1vB6Ukr6sZ1Tp4HIF6le8nL83qN4agTYyCPMwD1hisgP6Kyuc&gaa_sig=4UrAQtOJr0QAe257Flf_mrtEbmmUlpqtkc27ZkakC-Vn5bgSxJ7pL-evu_Q7AvlVtdT2VxSqJaze_q7LwfGUag%3D%3D&gaa_ts=689bb3e6)

[2] title: Fed Rate Cut Grows More Likely as Inflation Holds Steady at ... (url: https://www.yahoo.com/lifestyle/articles/fed-rate-cut-grows-more-130207774.html)

[3] title: US Treasuries Rally After July Inflation Meets Forecasts (url: https://www.bloomberg.com/news/articles/2025-08-12/us-treasuries-rally-after-july-inflation-meets-forecasts)

[4] title: Wall Street Rises Amid Speculation of Federal Reserve ... (url: https://www.binance.com/en/square/post/28231486800953)

[5] title: Dollar eases as US inflation data keeps September rate cut ... (url: https://www.reuters.com/world/middle-east/dollar-eases-us-inflation-data-keeps-september-rate-cut-table-2025-08-12/)

[6] title: Wall Street rises to more records on hopes for lower ... (url: https://www.wdrb.com/news/national/wall-street-rises-to-more-records-on-hopes-for-lower-interest-rates/article_b37b103f-21ef-5ba7-a36d-6f124c9c0abf.html)