Fed Signals Possible Rate Cuts, but Crypto Markets Rattled
- Federal Reserve officials signaled the possibility of a September rate cut during their July meeting: But crypto prices pulled back after Iran pledged it would retaliate against Israel for assassinating Hamas leader Ismail Haniyeh on Iranian soil.
- Donald Trump expressed strong support for cryptocurrency at the Bitcoin Conference in Nashville: Trump pledged to set up a strategic bitcoin reserve, stop the US from selling its bitcoin, and fire SEC chair Gary Gensler if he gets re-elected.
- Cantor Fitzgerald CEO Howard Lutnick announced the firm's plan to establish a Bitcoin financing business with an initial $2 billion investment: The initiative aims to provide leverage to bitcoin investors and strengthen the cryptocurrency ecosystem.
- The nine US spot Ethereum ETFs saw $98.29 million in outflows on Monday, extending their negative flow streak: BlackRock’s ETHA and Fidelity FETH led the inflows, while Grayscale Ethereum Trust faced significant outflows.
- The SEC is looking to amend its complaint against Binance, which could delay a court ruling on the security status of specific tokens: This move involves third-party crypto asset securities and adheres to a court directive for further proceedings.
Fed Signals Possible Rate Cuts, but Middle East Tensions Rattle Crypto Markets
Federal Reserve officials at their July meeting on Wednesday opted to keep interest rates unchanged at 5.25%-5%, after the personal consumption expenditures (PCE) price index, a key inflation measure, increased by only 0.1% in June. This brought the year-over-year rise to 2.5%, down from 2.6% in May, moving closer to the Fed’s 2% inflation target.
Federal Reserve chair Jerome Powell for the first time hinted at the possibility of cutting rates in September, saying the move is “on the table” if the US continues to make progress on inflation. That would mark the first time the Fed has cut rates in four years.
The announcement did not appear to have much impact on cryptocurrency prices. On Wednesday, hitcoin dropped about 2%, below $65,000, while ether dropped more than 1%, hovering above $3,200. The negative price action came after a New York Times report indicated that Iran will take retaliatory action against Israel after Israel assassinated Hamas leader Ismail Haniyeh in Tehran.
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