A busy week lies ahead on the United States economic calendar, with all eyes on the central bank on Wednesday.
Crypto markets ended last week on a high note with total capitalization topping $4 trillion again, but momentum waned over the weekend.
Stock markets in the US reached record highs last week as markets fully priced in a 0.25% rate cut this week. However, the job market continued to signal weakness with a sharp jump in weekly unemployment claims.
On Wednesday, the Fed will cut rates for the first time in 2025 and ‘blame’ a weak labor market, said the Kobeissi Letter.
The August retail sales report is due on Tuesday, which is a gauge of consumption and broader economic sentiment.
The main event of the week is the FOMC meeting on Wednesday, which is likely to see the central bank cut rates for the first time since December 2024. CME futures markets project a 96.4% probability of a 25 basis point cut and a 3.6% chance of a larger 50 basis point cut.
The Fed has been clear recently that it is more focused on the weakening labor market than on any persistent inflation risks.
“Amid US macro uncertainty and gold’s record rally, crypto assets are demonstrating resilience and long-term hedging properties against inflation,” said Nick Ruck, director at LVRG Research.
“With aggressive fiscal policies and expected Fed easing likely to extend the crypto cycle into 2026, both assets stand to benefit from sustained macroeconomic pressures. Mounting stagflation concerns may further support this dynamic, reinforcing the case for alternative stores of value as the Fed weighs this week’s interest rate decision.”
“We have concerns that the September 17 Fed meeting, which delivers a 25bp cut, could turn into a ‘Sell the News’ event as investors pull back to consider macro data,” wrote JPMorgan Global Head of Market Intelligence Andrew Tyler in a note.
Thursday will see the Philadelphia Fed Manufacturing Index and initial jobless claims data, but neither is likely to impact markets.
With the Fed rate cut largely priced in, markets are already starting to react with the typical Monday decline as total capitalization shrinks by 1% to $4.13 trillion.
Bitcoin topped $116,000 twice over the past 24 hours but faced resistance there before sliding back to $115,000. The asset recovered in early trading on Monday morning in Asia to return to $116,000.
Ethereum topped $4,700 before pulling back slightly over the weekend to trade at $4,630 at the time of writing as it remains rangebound.
The altcoins were mostly red with larger losses for XRP, Solana, Cardano, and Chainlink.
