Markets price 100-basis-point Fed rate cuts by January 2026 as crypto eyes altseason rally

Markets have priced in three Federal Reserve rate cuts before January 2026, with the crypto market closely watching as the potential for a new “altseason” gains momentum. Traders and investors are increasingly factoring in the possibility of easing monetary policy, which is seen as a potential catalyst for increased liquidity and risk-on sentiment, particularly within the digital asset space [1].

The CME FedWatch Tool shows a 94% probability of a rate cut in September, with Polymarket participants also placing the odds at 85%. Both retail and institutional investors appear aligned in their expectation that the Fed will begin its easing cycle soon. Wise Advice reported that markets have already fully priced in cuts for September, October, and December, marking a projected 100 basis-point reduction in the Fed funds rate over seven months. Goldman Sachs has suggested the possibility of a more aggressive 50-basis-point cut if unemployment rises [2].

The anticipated shift in monetary policy has significant implications for asset allocation. Lower borrowing costs typically encourage capital to flow into higher-risk assets, and historical trends suggest that crypto markets are among the first beneficiaries. Reports from Cryptoinsightuk indicate that liquidity often moves from major tokens like Bitcoin and Ethereum before spilling into smaller altcoins. Alva noted that in past cycles, Bitcoin and Ethereum typically led a two-phase rally, followed by increased capital inflows into DeFi, layer-2 networks, and niche narratives such as AI and real-world assets [3].

As the Fed’s timeline for rate cuts becomes clearer, the alignment with crypto market expectations could create favorable conditions for an altseason. September, October, and December meetings are now seen as critical turning points, with traders positioning for increased capital rotation into risk assets. The potential for a market-wide liquidity surge strengthens with every expected rate cut, reinforcing the narrative that crypto thrives in an environment of cheap capital [4].

Despite the growing enthusiasm, analysts caution that market expectations may be outpacing actual policy decisions, creating a gap that could lead to volatility. While the current pricing of three cuts by January reflects strong conviction, the path to an altseason is not guaranteed and could be disrupted by unexpected macroeconomic developments or regulatory actions. Retail investors, in particular, are being urged to assess the fundamentals and risks of speculative assets before participating in the hype.

The current market dynamics highlight a convergence between Fed policy expectations and crypto market behavior. Investors are preparing for a shift in both monetary and crypto cycles, with altcoin presales and broader risk-on sentiment showing signs of acceleration. Whether this translates into a sustained altseason remains to be seen, but the anticipation of easing policy is already shaping the landscape of capital flows and speculative activity in the digital asset space [5].

Source:

[1] https://www.livebitcoinnews.com/markets-price-3-fed-cuts-by-january-as-altseason-hype-builds/

[2] https://coincentral.com/best-altcoin-to-buy-this-week-punisher-coins-presale-has-record-week-while-cardano-and-sui-dip/

[3] https://www.reddit.com/r/CryptoCurrency/comments/1mhu1v9/daily_crypto_discussion_august_5_2025_gmt0/

[4] https://www.binance.com/square/profile/arcane_hash

[5] https://e.thsi.cn/