The Federal Reserve Policy Meeting on September 17th will be one of the most consequential results for risk assets this year, with crypto traders volatility.
The market is overwhelmingly priced with rate cuts, but the scale of its movement can trigger very different reactions between Bitcoin and Altcoin, whether in a 25 basis points, 50 basis points, or an unchanged scenario.
25Basic Points Baseline
Most analysts consider quarter point cuts to be the base case. Charlie Billello noted that the Fed’s funding rate is expected to be reduced by 25 bps this week.
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Meanwhile, bond market watchers like Shazi have argued that the decision is already locked. Yields are priced three such reductions by the end of the year.
“Since April 4th, the 10-year note yield has officially fallen below 4.00%. The market is fully priced with three 25 bps interest rate cuts by the end of the year,” the Kobeissi letter added.
Nevertheless, its certainty could be a double-edged sword, and analysts have already predicted sales news events.
“There’s probably a 99% chance that interest rate cuts will be announced. No one will be surprised. That’s why it’s often a cell news event. If you get through that news, you’ll probably be green on Thursday and probably end green on Friday,” an analyst at Incomesharks said.
Meanwhile, Bitcoin’s history with rate cuts shows that excitement often gives way to sudden selling.
Therefore, traders should note that they assume that the cut automatically means rally.
“The Fed’s reduction rate was December 18, 2024. Bitcoin was $106,000, dumping 30% within a few weeks,” observed analyst Quinten.
With Bitcoin recovering above the $115,000 threshold, traders are wary of similar dynamics being deployed.
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Analyst Ted Pillows mapped two bearish short-term scenarios. The first involves a drop heading towards $104,000 before the reversal, while the second fills the CME gap by highlighting a deeper slide towards $92,000 before ralliving into a new high.
50 basis points surprises
Still, if it is not possible, a larger cut is possible. According to Gurgavin, Standard Chartered expects a 50 bps move, while Kalshi Odds suggests only a 9% chance.
Analysts believe that such decisions could skyrocket with a bullish forecast + $2.5 trillion market liquidity.
X’s popular user Zero Hedge has noted JPMorgan’s rating that while the chances of a 50 bps cut are only 7.5%, it allows you to move your stock by 1.5% with either method.
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If realized, this more aggressive mitigation is likely to encourage short-term gatherings in Crypto, breaking the “sell” cycle in hopes of the Fed providing deeper liquidity.
Zero cut shock
Analysts do not actively seek holds, but they cannot dismiss the possibility. Zero Hedge noted that even hiking has nominal odds in the market model, highlighting prolonged uncertainty.
Sentiment could soon be released if Powell refuses to cut back. As hunt-like traders have observed, the market is already “on the volatile ground,” with politics and tariffs complicating the picture.
“The crypto market has returned to volatile ground. Bitcoin has been pulled back from its recent highs as traders consider what the Fed will do next. The 25 bps rate cut at this week’s FOMC meeting is likely calling for a deeper cut,” Hunt explained.
This tug of war between politics and policy adds new volatility to Bitcoin and altcoins, which are drooping in balance.
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“…Just the question: Will the Fed play it safely or will they swing it hard?” The hunt poses.
The uncut result is likely to lead to sudden divestment across risky assets, with Bitcoin being particularly exposed.
Beyond decisions, tone is important
Ultimately, much depends not only on the size of the cut, but also on Powell’s guidance. Crypto market participants will monitor the Fed Chair speeches about possible clues.
“If Powell speaks in an incredible way, it won’t sell the news.
As Yaarrr emphasized, traders will analyze cues for future mitigation, with seasonal equity in September adding another layer of risk.
The crypto market has been gathering for months in hopes of easier money.
However, September 17 marks the beginning of a new leg or there is a painful reset hinge, and which scenario will occur tomorrow.
