If the Federal Reserve (Fed) unexpectedly cuts interest rates this week, there is a forecast that the cryptocurrency market could experience a massive rally. The possibility of a significant rebound in major cryptocurrencies such as Bitcoin (BTC), Ethereum (ETH), and XRP, along with US stocks and real estate, is increasing, and investor expectations are growing.
Cryptocurrency analyst and media host Paul Barron analyzed on the social platform X (formerly Twitter) that if the Fed makes a sudden rate cut at the July Federal Open Market Committee (FOMC) meeting, a strong upward momentum could emerge across both stock and cryptocurrency markets. Currently, the market sees a 24% possibility of a July rate cut, while the September rate cut possibility is 81%. In such low expectations, a rate cut could trigger a 'surprise effect' causing a market-wide surge.
Bitcoin is currently trading between $116,000 and $119,210, while Ethereum is trading between $3,600 and $3,871, maintaining a cautious trend while observing the Fed's moves.
Barron analyzed that if the rate cut materializes, the high-interest burden would be alleviated, providing a rebound basis for tech stocks, growth stocks, and the real estate market. The current mortgage rate of 6.8% could be lowered, potentially stimulating housing demand. Additionally, a weaker dollar is expected to boost US exports. He emphasized that altcoins like XRP and ADA, despite facing short-term profit-taking, could be lifted by a clear catalyst of rate cuts.
John E. Deaton, who led the US Ripple-related class action lawsuit, also agreed with this outlook. He stated, "If Powell and the Fed lower interest rates, asset prices will rise across the board, with the cryptocurrency market showing particularly strong upward momentum." He also suggested that this could help restore market confidence for President Trump and his economic advisors.
However, optimism is not the only perspective. According to the prediction market platform Polymarket, investors assess a 96.3% probability that the benchmark interest rate (4.25~4.5%) will be maintained at the July 29-30 FOMC meeting, with a less than 3% chance of a 25bp (0.25%) cut. This data suggests that the Fed has been maintaining a cautious stance amid concerns about inflation and economic conditions.
Barron also pointed out that a rate cut could potentially be a market uncertainty factor. If the rate cut is perceived as a 'fear-based decision' stemming from economic slowdown concerns rather than growth expectations, it could highlight consumption sentiment contraction and stagflation worries. There are also concerns that if the Fed fails to address wage inflation in a situation with employment rates below 4%, it could fall into a 'wage-price spiral'.
Ultimately, the market is expecting 'economic relaunch'. If the Fed cuts rates this week while clearly positioning it as a signal of economic recovery, a rebound across risk assets, including cryptocurrencies, could become a reality. However, if this does not happen, market-wide confusion could spread. All eyes are on whether the FOMC's statement will be a trigger for a massive rally or a catalyst for disappointing sell-offs.
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