Crypto Market Shifts Focus From Trump's Rate Cuts

President Trump has once again called on Federal Reserve Chair Jerome Powell to cut interest rates, but the crypto community appears to have moved on from this narrative. The likelihood of rate cuts remains low, but the market has found new bullish drivers.

When Trump's tariffs threatened to disrupt the global economy, the crypto industry pinned its hopes on one bullish narrative: cuts to US interest rates. The President repeatedly pressured Jerome Powell, even threatening to fire him before eventually backing down. Powell and his allies remained firm, and rate cuts did not materialize. Trump has continued to appeal to Powell, most recently stating that there is no inflation and that prices of essential goods are down, urging the Fed to lower rates.

Throughout these developments, the crypto industry repeatedly urged more rate cuts, claiming that the "money printer" would stave off economic collapse. However, the latest Federal Open Market Committee (FOMC) meeting reaffirmed the status quo. The crypto market seems to have finally accepted that Trump cannot force rate cuts.

Crypto-affiliated prediction markets, such as Kalshi, have repeatedly posted optimistic odds of Trump's rate cuts compared to traditional financial assessors. For instance, the last time Trump made this request, Kalshi predicted that three cuts would happen this year. This would have signified a cut at half of the year’s remaining FOMC meetings. In March, Kalshi even expected four cuts. However, the CME Group put over 98% odds on no cuts in May, and this scenario is what happened. Kalshi has since lowered its expectations, currently anticipating only two cuts for the rest of the year, much more in line with other firms’ predictions.

What can crypto conclude from this? The community has apparently internalized that Trump cannot force cuts to interest rates. However, things are going well regardless. A US-China trade deal pushed Bitcoin over $105,000, and new investors are entering the market. Fear has largely left investors’ calculations. Who needs rate cuts, anyway?

All that is to say, Trump’s proposed interest rate cuts were just one way to potentially boost crypto investment. If Powell spontaneously changed his mind today, it’d be bullish, but as of now, the crypto market is slowly moving away from these macroeconomic drivers. Between a US-China trade deal, new investors, and technological advancements, recession fears have apparently left the crypto market.