Crypto Markets Brace for Fed Rate Cut: 3 Key Factors to Watch

Cryptocurrency markets face a pivotal week as investors await the Federal Reserve’s first rate cut of 2025. After last week’s rally pushed total crypto capitalization above $4 trillion, momentum cooled over the weekend, leaving traders cautious ahead of Wednesday’s FOMC decision.

U.S. stock markets hit record highs last week, reflecting expectations of a 25-basis-point rate cut. Meanwhile, signs of labor market weakness, including a jump in weekly unemployment claims, are adding uncertainty. Analysts suggest this combination could shape crypto market behavior in the days ahead.

Three events are expected to influence digital assets:

1. August Retail Sales Report: Released Tuesday, this report will indicate consumer spending trends and broader economic sentiment.

2. FOMC Rate Decision: The main event on Wednesday, where a 25-basis-point cut is heavily anticipated, with a slim chance of a 50-basis-point adjustment.

3. Philadelphia Fed Manufacturing Index & Jobless Claims: Set for Thursday, these metrics are less likely to drive significant market shifts but may add nuance to investor expectations.

Crypto analysts note that digital assets have remained resilient amid macro uncertainty and gold’s recent record rally. Some argue that easing by the Fed could extend the current crypto cycle into 2026, as investors look to alternative stores of value amid mounting stagflation concerns.

Bitcoin has traded around $116,000 but faced resistance at that level, while Ethereum remains in a $4,600–$4,700 range. Altcoins saw mixed performance, with XRP, Solana, Cardano, and Chainlink posting heavier losses compared to the top two assets.

Market watchers are closely monitoring whether this week’s rate cut triggers a “sell the news” reaction or bolsters crypto as a hedge against ongoing economic pressures.