Bessent Calls for 50bps Fed Rate Cut, Lifts Ethereum
Treasury Secretary Scott Bessent has called for a 50bps Fed rate cut in September after revised data showed 258,000 job cuts in May and June and July inflation rose 2.7% year on year. He argued that earlier rate cuts could have occurred in June or July if initial figures had been accurate. This push for a Fed rate cut has lifted risk assets, with Ethereum climbing to multi-year highs and Bitcoin rallying on speculations of an altcoin season. Options data reveal traders are buying downside protection ahead of potential cuts in Q3. President Trump’s Fed board nominee, Stephen Miran, could add weight to a rate cut if confirmed before September. Crypto traders should track upcoming jobs reports and inflation data to gauge Fed policy and its impact on market liquidity.
Bullish
By advocating a 50bps Fed rate cut, Bessent signals a shift toward monetary easing, which typically lowers yields and encourages investors to seek risk assets like Ethereum. In the short term, speculation of a Fed rate cut has already driven Ethereum to multi-year highs, with traders capitalizing on increased liquidity and borrowing incentives. Options data showing a buildup of downside protection suggests participants are optimistic but hedging against potential volatility around the September meeting.
Over the long term, if the Fed follows through with rate cuts, the reduced cost of capital could sustain inflows into Ethereum and other crypto assets, reinforcing the bullish trend. However, persistent inflation above 2% remains a risk that could limit the scale of easing and keep markets volatile. Overall, the prospect of lower rates is constructive for Ethereum’s price outlook, supporting a bullish stance.