50 Basis Points Interest Rate Cut Now Possible Ahead of Fed Meeting

One week before the Federal Open Market Committee (FOMC) meeting on September 17, prediction markets indicate a potential 50 basis-point interest rate cut. This shift follows recent data that increased expectations for a more aggressive cut, positively impacting cryptocurrency markets.

Key points include:

The CME Group's FedWatch tool estimates a nearly 10% chance for a target rate of 375-400 bps after the meeting.
Prior to September 5, the market anticipated a 25 bps cut to 400-425 bps, with no cuts now ruled out.
Kalshi traders are pricing a 16% chance for a cut exceeding 25 bps, with $41 million in volume; Polymarket shows a 15.3% chance for a 50 bps cut, totaling $91 million in bets.
Interest rate cuts typically benefit risk-on assets like cryptocurrencies as capital shifts from treasury bonds.
Current PPI data stands at 2.6%, lower than the expected 3.3%, influencing market sentiment.

As of now, BTC trades above $113,750, gaining 2% since September 8. The total crypto market cap is $3.88 trillion, up 1.5%. While Bitcoin continues to influence the overall market, recent trends show a slight decoupling as altcoins gain traction.

Potential triggers for an altseason may arise from the upcoming rate cut and other market signals, including Tether’s unusual $2 billion USDT mint and Nasdaq’s movements toward tokenized securities trading.