The financial world is buzzing as the Fed interest rate cut probability for September 2025 has skyrocketed to over 90%, according to the latest CME FedWatch Tool data.
This sharp rise, from around 78% just days ago, stems from weaker-than-expected U.S. economic indicators, including July’s job growth of only 114,000 (below forecasts) and steady inflation near the Fed’s 2% target.
For crypto enthusiasts, this Fed interest rate cut probability surge signals a potential boon, as lower rates often divert capital from safe assets to high-risk ones like digital currencies.
Historical Impact of Fed Interest Rate Cuts on BTC and ETH
Let’s examine past Fed interest rate cuts. Rate cuts have historically correlated with crypto rallies, as they reduce borrowing costs and encourage investment in volatile assets.
Here’s a comparison table of key periods:
| Period | Fed Action | BTC Price Change | ETH Price Change | Key Notes |
| 2019 (Q3-Q4) | Three rate cuts (total 75 bps) | +200% (from $4,000 to $12,000) | +150% (from $130 to $325) | Post-cut liquidity boosted altcoin adoption amid trade wars. |
| 2020 (Emergency cuts) | Rates slashed to near-zero | +400% (from $5,000 to $25,000) | +1,000% (from $100 to $1,100) | Pandemic stimulus fueled crypto as a hedge against inflation. |
| 2023 (Pause after hikes) | Signals of cuts | +150% (from $16,000 to $40,000) | +100% (from $1,200 to $2,400) | Easing expectations post-hiking cycle revived DeFi interest. |
These patterns suggest that a confirmed Fed interest rate cut probability turning into action could propel similar gains, especially if combined with the current market recovery.
Altcoins Poised to Benefit
With Ethereum’s on-chain volume hitting $240 billion monthly, altcoins tied to scalability and DeFi are likely winners. Here’s a quick look at predictions:
- Solana (SOL): Could surge 20-30% short-term due to its fast transaction speeds and growing NFT ecosystem.
- Avalanche (AVAX): Benefits from institutional interest in subnets; expect gains if rates drop, mirroring 2023’s rally.
- Layer-2 Tokens (e.g., ARB, OP): Ethereum scaling solutions may see 15-25% uplift as lower rates boost DeFi lending and borrowing.
While optimism abounds, risks like persistent inflation or geopolitical tensions could temper gains. Investors should monitor upcoming data releases for confirmation.
As the Fed interest rate cut probability evolves, crypto’s future looks brighter. Follow our MevX blog for real-time updates and expert analysis!
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