Bitcoin and the broader crypto market are holding steady, but sentiment remains cautious after a top U.S. economist cast doubt on the impact of the Federal Reserve’s expected rate cut. Traders are now looking to October’s ETF decisions as the real driver of momentum.
Stephen Moore Questions Fed Rate Cut Impact
At the Jackson Hole Symposium, Fed Chair Jerome Powell hinted that the central bank could cut interest rates in September, citing weakness in the labor market. The remarks initially gave risk assets, including crypto, a lift.
But Stephen Moore a senior economist at the Heritage Foundation and Donald Trump’s 2019 Fed nominee downplayed the move’s significance. Speaking on Thursday, he argued that the Fed’s benchmark interest rate has “become irrelevant” since banks no longer rely on it.
Instead, Moore believes the real lever is the Interest on Reserves (IoR), which currently sits at 4.4%. Banks earned $186 billion last year from holding about $3.5 trillion at the Fed. Cutting IoR, he said, would have a much more meaningful impact on liquidity and financial markets.
Risks of a Hawkish Cut
While investors expect a dovish policy shift, some analysts warn of a “hawkish cut” where the Fed reduces rates but signals a restrictive longer-term outlook.
That possibility is supported by mixed economic data: GDP growth surprised to the upside, while inflation remains stubbornly above the 2% target. Such a stance could mute enthusiasm across both equities and crypto.
At press time, Bitcoin traded at $112,645, up 3.7% from its monthly low. Ethereum and Solana were largely flat, while the global crypto market cap held around $3.9 trillion.
October ETF Decisions Seen as the Real Catalyst
For many in the crypto space, the real game-changer won’t come from the Fed it will come from ETF approvals.
The SEC, led by Paul Atkins, has pushed most altcoin ETF decisions into October, covering tokens such as Solana (SOL), Ripple (XRP), Hedera Hashgraph (HBAR), and Dogecoin (DOGE).
Prediction markets like Polymarket currently assign high odds to eventual approvals. Demand appears strong: Ethereum ETFs have already pulled in $13.6 billion, while even smaller altcoin futures ETFs like XXRP, SSK, and UXRP have seen notable inflows since launch.
The Bottom Line
While short-term macro headlines like the Fed’s September rate decision will continue to sway sentiment, the crypto market’s bigger catalyst looks set for October. If multiple ETF approvals go through, Bitcoin and altcoins could see a wave of institutional demand that overshadows any modest policy shifts from the Fed.
