On September 16–17, the US Federal Reserve’s Federal Open Market Committee (FOMC) will meet to determine whether it will lower interest rates.
Based on Polymarket predictions, 90% predict a decrease of 25 basis points (bps), with another 7.5% expecting the Fed’s interest rate to drop by 50 bps, i.e., 0.5%, in one go. Two-thirds of people are also betting on a 25 bps drop for the Oct 28–29 meeting.
To what extra crypto price gains have already been factored in leading up to the decision is anyone’s guess. The Nasdaq and Dow Jones Industrial Average futures are also up in the lead-up to this decision, so it would be very surprising if Jerome Powell keeps rates on hold (and will likely infuriate Trump and Bessent, but I digress).
I believe we haven’t peaked yet in this four-year cycle, assuming it remains intact. As I’ve mentioned several times over the past four months, Google Trends indicates that we haven’t yet reached our peak.
Sidenote: This Trends data remains relevant, despite being the first cycle with LLMs such as ChatGPT, Gemini, and Copilot, among others. Google searches still have a several-fold lead over LLM queries combined, but this will undoubtedly diminish.
Bitcoin’s price increase of 67% since the November 2021 peak of $69,000 is very modest, perhaps somewhat disappointing when considering gold’s 85% gains over a similar period.
If interest rates drop as anticipated, this will significantly boost liquidity for Bitcoin, altcoins and other asset classes, especially with a 50-bps cut.
The relative lack of interest in this market from retail, coupled with at least two more modest rate cuts within the next three months, will likely set us up for an explosive Q4, akin to 2017 and 2021.
However, to play devil’s advocate, a sharp drop in interest rates might imply a worse-than-expected economic situation and would likely lead to increased inflation. However, not dropping rates (fast) enough can stifle economic growth, so it’s a delicate balancing act.
Most economies worldwide are holding their rates steady for now, and others, such as Australia and Canada, have recently lowered theirs.
Overall, I’m banking on further cuts, as U.S. labour growth eases, global financial woes deepen in the coming years (the World Debt Clocks say it all), particularly with inflation rates, persistent geopolitical tensions, and the gradual overhaul of various industries with the rise of AI.
Two 25 bps reductions (one this week, the other in October) would be the most sustainable option for this market, as opposed to a sharp 50 bps drop, followed by 25 next month.
“I think the data has come in reinforcing the notion of labor market weakness, but we’re also seeing some spillover into higher prices, which suggests 25 is a better choice than 50.”
Former Federal Reserve Vice Chairman Roger Ferguson, CNBC interview, Sept. 15, 2025.
Another plausible outcome would be a 50-basis-point cut in September, 25-basis-point cuts in October and December, which wouldn’t surprise me, given that Trump has pushed Powell to lower rates since his return to the White House.
My guess is a 25-bps cut this month, hold in October, and a 25-bps reduction in December.
How low will the rates go? What are your predictions for the remaining meetings in 2025? Comment below.
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(AI-generated).