Bitcoin Stalls on Rate Cut as Hopes Fade—Will This Week Be Different?
Welcome to the Asia Pacific Morning Brief—your essential digest of overnight crypto developments shaping regional markets and global sentiment. Monday’s edition is last week’s wrap-up of bitcoin moves and this week’s forecast, brought to you by Paul Kim. Grab a green tea and watch this space.
The highly anticipated interest rate cut finally became a reality last week, but Bitcoin’s price failed to rally. This starkly contrasts with the Nasdaq, which strongly correlates with Bitcoin’s price and surged 1.7% in the same period.
The Fed’s ‘Risk Management’ Strategy
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Last week, the Federal Reserve’s Federal Open Market Committee (FOMC) meeting was one of the most significant events of the month. The Fed lowered the U.S. federal funds rate by 25 basis points to 4.0%–4.25%. A majority of policymakers supported the move.
Speaking at a post-announcement press conference, Fed Chair Jerome Powell framed the cut as a preemptive move to counter weak jobs data.
Powell was clear when a reporter asked if the Fed was embarking on a new rate-cutting cycle. He stated this was a “risk management cut.” He added that the Fed would decide on future rate moves on a meeting-by-meeting basis, depending on the data.
Since early August, risk asset investors have been pricing in a series of continuous rate cuts. Real-time price data from the Binance exchange shows that Bitcoin’s price dropped below the $115,000 level as Powell made his statement.
The “risk” Powell referred to is the potential for a contracting labor market. The US July non-farm payrolls data came in well below market expectations. Moreover, the recent August report showed a historic low of just 22,000 new jobs. While the unemployment rate remains at a seemingly stable 4.3%, the nature of employment data—which can deteriorate rapidly once it begins to soften—necessitated a preemptive cut.
Fed Is Optimistic for Long Term
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The Fed’s economic projections remain optimistic, forecasting above-potential growth through next year. This suggests that the rate cut was solely a preventative measure driven by concerns over the labor market.
Powell’s rejection of a rate-cutting cycle quickly cooled off the crypto investors riding high on those expectations. This is why Bitcoin’s price returned to its starting point three days after the rate cut.
According to the CME Group’s FedWatch Tool, the market is still pricing in two more rate cuts starting in October. However, expectations for rate cuts in 2026 have decreased from three to two.
If job data improves in October or December, a strong argument could emerge within the Fed to halt further cuts. This is especially true with inflation still well above the 2% target. In that case, expectations for 2026 rate cuts would likely diminish further.
Altcoins Show Diverging Trends
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Bitcoin’s price has held up relatively well. In contrast, Ethereum (ETH) fell 4.25% weekly despite consistent US spot ETFs and institutional buying inflows.
Altcoins showed mixed performances based on individual news. Solana (SOL), which had a strong weekly rally of nearly 20% just two weeks ago, dropped 2.25% last week.
Meanwhile, Binance Coin (BNB) surged 11.80% in a week. This came amid rumors that CEO Changpeng Zhao (CZ) could potentially return to Binance after he removed the word “former” from his X account bio.
Cryptocurrencies listed on South Korean exchanges Upbit and Bithumb, which have strong retail markets, also saw significant gains last week. Euler (EUL), Plume (PLUME), and Toshi (TOSHI) each saw a sharp but temporary spike in price.
The Week Ahead: Fed Speakers Take the Stage
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Several key economic data points will be released this week, including the S&P flash U.S. services and manufacturing PMI on Tuesday and the PCE inflation and Personal Spending data on Friday.
However, the real focus will be on speeches from Fed officials. The Fed’s dot plot, released after the September FOMC meeting, revealed a wide divergence of opinions on the future path of interest rates, and powerful statements could emerge in public speeches, potentially moving the markets.
Fed Governor Stephen Miran, the sole member to advocate for a 50-basis-point cut in the September FOMC, is scheduled to speak on Monday. He is also believed to have penciled in 175 basis points of cuts by the end of this year.
On the same day, speeches from Cleveland Fed President Beth Hammack and Richmond Fed President Tom Barkin will also be delivered. Hammack is believed to have voted for no rate cuts this year, which has the market on edge.
Other key speeches are scheduled for Tuesday, with Fed Vice Chair for Supervision Michelle Bowman and Fed Chair Jerome Powell, and Thursday, with Chicago Fed President Austan Goolsbee. Their comments could introduce volatility into Bitcoin’s price, which is currently in a state of weak sentiment.
Here’s hoping investors have a profitable week.
