Crypto markets successfully closed last week with total capitalization soaring above $4 trillion, though signs of diminished momentum were apparent over the weekend. Meanwhile, U.S. stock markets achieved all-time highs, bolstered by the anticipation of a 0.25% rate cut scheduled for this week. However, persistent vulnerabilities in the job market emerged, highlighted by a notable increase in weekly unemployment claims.
The Federal Reserve is set to announce its first rate cut of 2025 on Wednesday, citing the ongoing weakness in the labor market as the primary driver behind its decision, according to insights from the Kobeissi Letter. This pivotal economic week features significant events from September 15 to 19, beginning with the release of the August retail sales report on Tuesday—a key indicator of consumer spending and economic sentiment.
The highly anticipated FOMC meeting on Wednesday is expected to see the central bank implement a rate cut for the first time since December 2024. Current predictions from CME futures markets suggest a 96.4% likelihood of a 25 basis points reduction, with only a slim 3.6% chance of an even larger cut of 50 basis points. The Fed has been transparent in prioritizing the declining labor market over potential inflationary threats, reinforcing its focus on macroeconomic stabilization.
Nick Ruck, director at LVRG Research, noted, “Amid U.S. macro uncertainty and gold’s record rally, crypto assets are demonstrating resilience and long-term hedging properties against inflation.” He added that aggressive fiscal policies coupled with anticipated Fed easing could prolong the crypto cycle into 2026, allowing both cryptocurrencies and gold to thrive under mounting macroeconomic pressures. Investor concerns over stagflation may further highlight the need for alternative stores of value as the Fed prepares for this week’s critical interest rate decision.
The key events to watch this week include:
1. August Retail Sales data – Tuesday.
2. Fed Interest Rate Decision – Wednesday.
3. FOMC Press Conference – Wednesday.
4. Fed Dot-Plot Projections – Wednesday.
5. Philadelphia Fed Manufacturing Index – Thursday.
6. Initial Jobless Claims data – Thursday.
As articulated by Andrew Tyler, JPMorgan’s Global Head of Market Intelligence, there are apprehensions that the Fed’s September 17 meeting, with its anticipated 25 basis point cut, could lead to a “Sell the News” scenario. Investors may opt to tread carefully as they digest upcoming macroeconomic data following the announcement.
In the cryptocurrency realm, with the prospect of a Fed rate cut largely accounted for, markets have begun to reflect the standard Monday correction, with total capitalization contracting by 1% to $4.13 trillion. Bitcoin reached $116,000 twice within a 24-hour period but encountered resistance before retracting below that threshold, recovering slightly to regain $116,000 in early Asian trading.
Ethereum also saw fluctuations, peaking at $4,700 before easing back to around $4,630, indicating its rangebound behavior. Conversely, altcoins experienced a more significant downturn, with notable losses in XRP, Solana, Cardano, and Chainlink.
This economic landscape presents a mix of opportunities and uncertainties for investors as they navigate the evolving markets.
