Banks Forecast Multiple Fed Rate Cuts After Weak August Jobs Data
US nonfarm payrolls rose by just 22,000 in August, well below the 75,000 estimate, increasing expectations of Federal Reserve rate cuts. Bank of America now anticipates at least two 25-basis-point rate cuts by year-end, while Goldman Sachs projects three cuts—starting in September and continuing through November. Citigroup also forecasts three cuts, scheduled for September, October and December. Lower rates tend to drive a risk-on environment, benefiting the crypto market as fixed-income yields lose appeal. CoinGecko data shows the total crypto market capitalization at roughly $3.09 trillion, down just over 1% in the past day. Traders will watch Fed communications and economic releases closely, as rate cuts could catalyze renewed bullish momentum in crypto.
Bullish
Historically, Fed rate cuts have spurred risk-on sentiment and boosted the crypto market by reducing yields on safer assets. Similar to past easing cycles—in 2020 and 2023—lower rates encouraged inflows into Bitcoin and altcoins, fueling rallies. In the short term, traders may see volatility around Fed announcements and jobs reports. Over the longer term, successive rate cuts are likely to sustain bullish momentum in crypto, as diminished fixed-income returns drive investors to seek higher returns in risk assets.