Recent comments from Jerome Powell on interest rates have dampened traders' hopes for a September cut, leading to a decline in cryptocurrency prices.
Uncertainty on Rate Cuts
At a recent press conference, Jerome Powell stated, "We remain highly attentive to inflation risks," emphasizing a wait-and-see stance until the next FOMC meeting on September 17-18, 2025. The Fed's primary concern is rising inflation, which hit 2.7% year-over-year in June, while the Consumer Price Index (CPI) rose 0.3% month-over-month, exceeding the Fed's 2% target. Meanwhile, unemployment has held steady at 4.2%, leaving little room for the Fed to justify a rate cut unless economic conditions worsen further.
September Rate Cut Odds Drop to 43%
Before the press conference, the chance of a September rate cut was 63%. However, after Powell's comments, this number dropped to 43%. Traditionally, lower interest rates tend to boost crypto by encouraging investors toward riskier assets like Bitcoin. While a delay in rate cuts may slow crypto growth, a significant drop is not expected.
Bearish Months Ahead for Crypto
Compounding uncertainty is the onset of the most bearish months of the calendar for Bitcoin - August and September. Over the past 12 years, it has dropped in 8 out of 12 Augusts and two-thirds of Septembers. On average, it falls by 8.6% and 4.6% during these months, respectively. Currently, Bitcoin is trading between $116,000 and $119,000, showing no clear direction. With slow price action and no strong support from the Fed yet, the crypto market may remain quiet.
Although prices are falling and there are delays in rate cuts, high liquidity levels could support the market. At the same time, seasonal patterns and expected high volatility create uncertainty for crypto investors.
