Cryptocurrency Markets Show Movement: Ethereum Surges, Bitcoin Stays Steady, Chainlink Breaks $27 on Expectations of a September Fed Interest Rate Reduction
In a remarkable turn of events, the cryptocurrency market has witnessed a significant surge, with key players reaching year-to-date highs and new all-time highs.
chainlink, the decentralised oracle network, has hit a year-to-date high of $27.11. This upward trend is echoed in Ethereum, which has edged towards historic highs, touching $4,834 during the rally. Bitcoin, the flagship cryptocurrency, has hovered near $117,000, aiming for $120,000.
The S&P 500, Bitcoin, and gold have all hit new highs simultaneously, indicating a strengthened link between crypto and traditional markets. This "hated rally" could shift once Fed rate cuts arrive, as many investors have kept cash on the sidelines, awaiting clarity on risk-taking.
The biggest risk to the Ethereum market, however, is the narrative around the Fed and any news contradicting the rate cut expectation could cause a correction. Caution lingers as chatter around "Fed," "rate," and "cut" has surged to an 11-month high.
Analysts from Commerzbank, Credit Agricole, and LPL Financial have predicted a possible Federal Reserve interest rate cut in September 2025, mainly due to signs that inflation is slowing and economic risks shifting toward labor market weakness, as signaled by Fed Chair Jerome Powell in his Jackson Hole speech. The Kobeissi Letter predicts that within a month, Powell may lower rates.
This potential rate cut could drive more liquidity into crypto as money market funds become less appealing and M2 money supply grows, according to David Duong, Head of Research at Coinbase. Whales continue to buy Ethereum, but Ethereum is set for a 6% correction, according to some analysts.
However, on-chain and sentiment data suggest a nuanced picture for crypto. Bitcoin shows optimism in social chatter, but utility metrics are cooling, and supply on exchanges is rising, hinting at potential selling pressure.
Regulatory signals, including Vice Chair Michelle Bowman's call for digital asset oversight, suggest that data-driven decision-making will remain crucial as markets brace for Fed moves. Negativity among retail traders has hit its lowest level since July, a possible contrarian sign of a market bottom.
Despite surging equity and crypto markets, money market funds remain near $7.4 trillion, reflecting cautious retail behavior amid tariff uncertainty. The surge in crypto markets can be attributed to Powell's signal of monetary easing.
In a bold statement, The Kobeissi Letter asserts, "Don't own assets? You will be left behind." As the crypto market continues to evolve, it remains to be seen how these trends will play out in the coming months.
