3 Things That Could Impact Crypto Markets as Fed Decision Looms

Crypto markets ended last week on a high note with total capitalization topping $4 trillion again, but momentum waned over the weekend.

Stock markets in the US reached record highs last week as markets fully priced in a 0.25% rate cut this week. However, the job market continued to signal weakness with a sharp jump in weekly unemployment claims.

On Wednesday, the Fed will cut rates for the first time in 2025 and ‘blame’ a weak labor market, said the Kobeissi Letter.

Economic Events September 15 to 19

The August retail sales report is due on Tuesday, which is a gauge of consumption and broader economic sentiment.

The main event of the week is the FOMC meeting on Wednesday, which is likely to see the central bank cut rates for the first time since December 2024. CME futures markets project a 96.4% probability of a 25 basis point cut and a 3.6% chance of a larger 50 basis point cut.

The Fed has been clear recently that it is more focused on the weakening labor market than on any persistent inflation risks.

“We have concerns that the September 17 Fed meeting, which delivers a 25bp cut, could turn into a ‘Sell the News’ event as investors pull back to consider macro data,” wrote JPMorgan Global Head of Market Intelligence Andrew Tyler in a note.

Thursday will see the Philadelphia Fed Manufacturing Index and initial jobless claims data, but neither is likely to impact markets.

Crypto Market Outlook

With the Fed rate cut largely priced in, markets are already starting to react with the typical Monday decline as total capitalization shrinks by 1% to $4.13 trillion.

Bitcoin topped $116,000 twice over the past 24 hours but faced resistance there before sliding back to $115,000. The asset recovered in early trading on Monday morning in Asia to return to $116,000.

Ethereum topped $4,700 before pulling back slightly over the weekend to trade at $4,630 at the time of writing as it remains rangebound.

The altcoins were mostly red with larger losses for XRP, Solana, Cardano, and Chainlink.

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