Kraken Analysts Predict Fed Rate Cuts Could Boost Crypto Markets

Strategists from Kraken and CF Benchmarks highlight a significant downturn in the US labor market, potentially prompting the Federal Reserve to lower interest rates. This could foster a positive climate for assets like Bitcoin.

A historic negative revision to US jobs data is noted, surpassing changes seen during the 2008 financial crisis.
The strategists suggest the Fed may pivot from an inflation to an employment mandate, with up to three rate cuts anticipated by year-end.

A Shift in Crypto Market Dynamics

Institutional capital rotation is evident, with increased fund flows into spot Ether ETFs, while Bitcoin funds see minor outflows.
Derivatives platforms show growing interest, particularly for XRP and Solana, with XRP reaching $1 billion in open interest.
Bitcoin's realized volatility has decreased, attributed to the launch of spot ETFs and strategies like covered calls, indicating a maturing market structure.

This potential policy change comes amidst low market participation, suggesting that lower rates could stimulate a broader market recovery.