For three years, sticky inflation forced the Fed to raise rates to 5.25%—the highest since 2006. A CPI reading below 3% signals the inflation crisis is fading, opening the door to rate cuts and easier money.
CME FedWatch data shows 75% odds of a 25bp rate cut in September, with 25% odds of a 50bp cut. This is a dramatic shift—two weeks ago traders expected rates to hold steady through year-end.
Lower rates reduce borrowing costs and weaken the US dollar—both tailwinds for Bitcoin and altcoins. During the last 10 years of rate cuts (2015-2019), Bitcoin rallied from $400 to $13,000.
Three risks linger: sticky core inflation staying above 3%, a strong jobs report on August 22, or new geopolitical shocks. Watch these data points closely—they determine if rate cuts continue.
The CPI beat validates risk-on positioning. Bitcoin targets $68K, Ethereum $2,100. Altcoins typically underperform during tightening but rally hard during easing cycles—prepare rotation strategies now.
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