Analyst: The bull run of Crypto Assets is about to slow down, with the probability of a rate cut in September dropping to 40%.

The Federal Open Market Committee (FOMC) decided on Wednesday (July 30) to keep interest rates unchanged, in line with market expectations. The Federal Reserve Chairman Powell did not give a clear response on interest rate cuts during the press conference, leading investors to lower their expectations for a rate cut in September. A crypto analyst believes this may slow down the pace of the crypto assets bull run. The Central Bank of the United States decided to maintain the interest rates at 4.25% to 4.5%, citing concerns that the economic outlook "remains high." This decision had a direct impact on the cryptocurrency market, including Bitcoin and Ethereum, raising concerns about the outlook for the bull run.

September interest rate cut probability decreases: Powell's "hawkish" remarks

(Source: Trading Economics)

Powell stated that the tariff increases have begun to reflect in the consumer prices of certain categories of goods. He does not rule out the possibility of maintaining the interest rate unchanged at the next Federal Open Market Committee (FOMC) meeting in September, adding that this will depend on economic data over the next two months. He said, "We have not made any decisions for September yet, and we will not make decisions in advance."

Bill Adams, chief economist at the American Union Bank, told Reuters: "If the unemployment rate remains stable and tariffs push up inflation, it will be difficult to justify interest rate cuts in the coming months." U.S. interest rates remain near their highest levels in over a decade. Powell, ignoring President Trump's calls for rate cuts, continues to take a wait-and-see approach as concerns grow that the ongoing trade war could hinder the Central Bank's efforts to achieve its 2% inflation target. The current U.S. inflation rate is 2.7%, having increased over the past four months.

Powell's remarks have lowered the possibility of a rate cut in September to 40% after the Federal Reserve meeting. Before the release of the FOMC statement, this possibility was as high as 63%.

Impact of Decreasing Interest Rate Probability on the Crypto Assets Market

Nick Ruck, the head of LVRG Research, told Cointelegraph: "If the Federal Reserve maintains a cautious stance, the pace of the bull run may slow down, but a potential liquidity surge could lay the foundation for the eventual rebound."

Henrik Andersson, Chief Investment Officer of Apollo Capital, told Cointelegraph: "The market has already priced in the expectation that there will be no interest rate cuts this week, so this is not surprising." However, the market still anticipates one to two interest rate cuts before the end of the year.

"We believe this will not have a substantial impact on the Crypto Assets market; for a while now, it has been clear that the uncertainty around tariffs will delay the interest rate cuts in the United States." He added that interestingly, two committee members held differing opinions, which is the first time in 30 years. Board member Christopher Waller and regulatory vice chair Michelle Bowman support the Federal Reserve (FED) lowering the interest rate by a quarter of a percentage point.

After the news was announced, the crypto assets market experienced a slight decline, but rebounded again during the trading session in Asia on Thursday morning. The total market capitalization is approximately $3.94 trillion, and it has been fluctuating within a consolidation range for the past two weeks. A reduction in interest rates in the United States usually boosts the crypto assets market, as lower interest rates decrease the appeal of traditional savings accounts, prompting investors to turn to riskier and higher-return assets like cryptocurrencies.

Conclusion:

The hawkish remarks by Federal Reserve Chairman Powell have significantly reduced the chances of an interest rate cut in September, which has impacted the rhythm of the bull run in the cryptocurrency market. Although the market may face a slowdown in the short term, long-term expectations of interest rate cuts and the appeal of cryptocurrencies as risk assets still exist. Investors should closely monitor the subsequent policy trends of the Federal Reserve, as well as changes in the macroeconomic environment, to assess the future trajectory of the cryptocurrency market.