Bitcoin News Today: Investor Bets Rise as Fed Pivots—Will Crypto Follow?

The U.S. Federal Reserve appears poised to implement a rate cut in September, with the likelihood of a 25-basis-point reduction now near certainty and a 50-basis-point cut increasingly within the realm of possibility. This decision, fueled by weaker-than-expected employment data, signals a shift in the Fed’s policy focus from inflation control to job market support. The August jobs report revealed only 22,000 new nonfarm payrolls, a stark decline from the 79,000 figure recorded in July, and the unemployment rate rose to 4.3% from 4.2%. These developments have prompted financial markets to price in a 92% probability of a 25-basis-point cut and a 14% chance of a 50-basis-point reduction at the Fed’s September 16-17 meeting, according to the CME Group’s FedWatch tool.

The anticipated rate cut has already triggered optimism in global markets, particularly in the cryptocurrency sector. While Bitcoin and Ethereum experienced limited price gains in the wake of the Fed’s policy shift, expectations of increased liquidity and reduced borrowing costs have bolstered market sentiment. The CME FedWatch tool's updated projections have pushed the probability of a September rate cut to 97.6%, with investors closely monitoring how the broader market will react to the Fed’s decision. On-chain analytics firm Santiment noted a significant increase in social media discussions related to "Fed," "rate," and "cut," indicating heightened investor interest and speculation.

However, the response from crypto markets has been mixed. Despite rising expectations for a Fed rate cut, Bitcoin’s price has not seen a strong or sustained rally. The U.S. spot ETF market, which typically supports Bitcoin during periods of uncertainty, reported a net outflow of $160.1 million in the wake of the jobs data, with BlackRock’s IBIT ETF experiencing a $63.2 million outflow. Ethereum has fared even worse, with over $780 million in net outflows from its spot ETFs last week. While institutional investors, such as Digital Asset Treasury companies, continue to accumulate Ethereum, the broader market has yet to respond with significant price movement.

Analysts remain cautiously optimistic about the potential for a crypto bull run should the Fed follow through with its rate cuts. Lower interest rates typically encourage investors to shift capital toward riskier assets, including cryptocurrencies. This liquidity boost can drive price increases while also amplifying market volatility. However, historical patterns show that high expectations can lead to "buy the rumor, sell the news" scenarios, where prices rise in anticipation of a policy change but fall if the outcome differs from expectations. This dynamic was evident in late 2020, when the Fed’s aggressive rate cut in response to the pandemic coincided with a 40% drop in Bitcoin prices due to economic uncertainty.

Looking ahead, the market will closely watch upcoming inflation data, including the Producer Price Index (PPI) and Consumer Price Index (CPI), for further insight into the Fed’s potential policy trajectory. If these figures remain below expectations, the case for additional rate cuts will strengthen, potentially spurring renewed momentum in risk assets. Meanwhile, the European Central Bank is expected to maintain its current interest rate policy, with no major changes anticipated in the near term. This divergence in monetary policy between the U.S. and Europe may continue to influence global capital flows and asset prices, particularly in the cryptocurrency markets.

As the September FOMC meeting approaches, all eyes remain on the Fed’s decision and its potential market implications. While the path toward lower rates appears increasingly certain, the ultimate impact on crypto markets will depend on broader economic conditions, investor behavior, and how quickly the anticipated liquidity boost translates into sustained price appreciation.

Source: [1] Fed Rate Cut Now Appears Certain After Weak Jobs Report (https://www.investopedia.com/job-report-seals-federal-reserve-interest-rate-cut-in-september-11804268) [2] Fed Rate Cut Hopes Rise: Bitcoin Price Doesn't Follow (https://beincrypto.com/fed-rate-cut-hopes-rise-bitcoin-price-doesnt-follow/) [3] Could an Interest Rate Cut from the Fed Help or Hurt Bitcoin? (https://www.nasdaq.com/articles/could-interest-rate-cut-fed-help-or-hurt-bitcoin) [4] Crypto Bull Run: Probability Of Fed Rate Cuts In ... (https://www.mitrade.com/insights/news/live-news/article-3-1101453-20250906) [5] European Shares Seen Up On Fed Rate Cut Optimism (https://www.nasdaq.com/articles/european-shares-seen-fed-rate-cut-optimism-french-confidence-vote-eyed) [6] EUR/USD remains above 1.1700 amid rising Fed rate cut ... (https://www.fxstreet.com/news/eur-usd-remains-above-11700-amid-rising-fed-rate-cut-bets-202509080115) [7] EUR/USD remains above 1.1700 amid rising Fed rate cut ... (https://www.mitrade.com/insights/forex-analysis/eur/fxstreet-EURUSD-202509080930)