Crypto Market Rebounds on Rate Cut Hopes Amid Tech Gains and Fed Policy Shifts

The cryptocurrency market experienced a rebound alongside U.S. equities on Monday, with tech-driven indices showing strong gains. While the Nasdaq climbed 1.84% and the Russell 2000 surged by 2.35%, Bitcoin’s rise was more modest at 0.74% according to CoinGecko data. This recovery followed a weekend sell-off that some analysts suggest may have marked a temporary market bottom [1].

The renewed optimism is largely driven by downward revisions to the U.S. employment data for May and June, which together were adjusted by 258,000 jobs. This has significantly shifted expectations for Federal Reserve policy, pushing the probability of a 25-basis-point rate cut in September to over 90%, up from 63.1% just a week earlier according to the CME’s FedWatch Tool [1]. Analysts and investors are closely watching these developments, as aggressive rate cuts could provide a tailwind for risk assets like cryptocurrencies.

However, the market’s recovery is tempered by ongoing uncertainties. The recent dismissal of Bureau of Labor Statistics Commissioner Erika McEntarfer by President Donald Trump has raised concerns about potential political interference in economic data reporting. This, combined with shifting tariff policies and broader administration unpredictability, has left investors wary [1]. Jake Ostrovskis, an OTC trader at Wintermute, described the Monday rebound as “fairly machine-driven” and warned of “plenty of signs of froth” and “high levels of risk taking” in both traditional and crypto markets [1].

Bitcoin options activity further reflects a cautious stance, with increased “put demand” observed in the $105,000–$110,000 range, signaling a desire for downside protection rather than speculative betting on a market correction [1]. Ostrovskis also pointed to broader warning signs, such as soaring U.S. equity valuations, high CTA exposure, and crowded short positions in the U.S. dollar. He noted that if equities falter, cryptocurrencies are likely to follow [1].

Despite these cautionary signals, macro analyst Alex Krüger has a more optimistic outlook. He views the weekend sell-off as a potential tradable low and draws parallels with the 2024 “August crash,” which also found a bottom on a Monday. Krüger described the current correction as a typical “shakeout” rather than the start of a new bear market, and he indicated a strategy of adding to long positions before the U.S. cash market opens if volatility persists [1].

Krüger emphasized that macroeconomic factors, rather than crypto-specific news, are the dominant force behind the current market dynamics. He compared the sequence of recent events—such as a hawkish Fed, mixed tech earnings, hotter-than-expected PCE inflation, and a weak payrolls report—to a similar pattern in 2024 that preceded a market bottom [1]. The latest PCE data showed headline inflation rising to 2.6% year-over-year, while core PCE reached 2.8%, slightly above forecasts [1].

Recent earnings reports from major tech firms have also played a role in shaping market sentiment. While Microsoft and Meta exceeded expectations, Apple’s results were met with a cooler reception, and Amazon’s performance was “very poorly received,” with its stock dropping around 7-8% [1]. Coinbase’s earnings further weighed on crypto sentiment, as the exchange missed revenue projections, creating what Krüger described as a “dreadful” backdrop for investor confidence [1].

Krüger remains bullish on the long-term outlook for crypto, pointing to the SEC’s new “Project Crypto” as a significant development that could drive inflows later in the year. The initiative aims to modernize securities regulations and bring more market infrastructure on-chain. The SEC chair recently outlined a vision for “American Leadership in the Digital Finance Revolution,” with tokenization and on-chain infrastructure as key regulatory priorities [1].

Source: [1] Is This the Crypto Bottom? Market Rebounds as Rate Cut Hopes Surge (https://blockonomi.com/is-this-the-crypto-bottom-market-rebounds-as-rate-cut-hopes-surge/)