**Crypto Market Eyes Fed's Next Move Amid Rate Cut Speculation**
The Federal Reserve might not cut interest rates as much as some market participants hope, according to Justin Elliot, a portfolio manager at Caldwell Investment Management. Despite this, the crypto industry remains optimistic about a potential rate cut in September.
Elliot cautioned that the market might be getting ahead of itself, with no solid evidence supporting the anticipated 100 basis points cut by year-end. He noted that while inflation is trending positively, the economy is still performing well, with strong retail sales.
Interest rates are crucial for Bitcoin, as higher rates make safer investments more appealing, potentially diverting funds away from riskier assets like Bitcoin. Conversely, lower rates often drive investors towards cryptocurrencies.
Following the latest Consumer Price Index (CPI) data showing a 2.9% annual price increase—the slowest since 2021—Bitcoin dropped by 3%, falling below $60,000. Despite this, Bitcoin has seen a 6% increase over the past 30 days.
The broader crypto community remains hopeful for a September rate cut, with experts like Andre Dragosch and Michael van de Poppe suggesting that continued deceleration in US inflation could strengthen the case for such a move. Zach Pandl from Grayscale also indicated that rate cuts might be necessary for Bitcoin to retest its all-time highs.
While the outlook remains uncertain, the crypto industry is closely watching the Fed's next steps.