The countdown to the Federal Reserve’s next policy meeting has the entire financial world on edge, but nowhere is the anticipation more intense than in crypto markets. Traders are betting heavily that the central bank will cut interest rates by a quarter point this week, a move that could inject fresh momentum into digital assets already riding a wave of optimism.
After rallying strongly last week, the crypto market entered a correction as traders took profits ahead of the Fed’s decision. Bitcoin is trading near $115,100, down around 0.8% in the past 24 hours, though still up nearly 3% over the past week. Ethereum has slipped to about $4,527, posting a daily decline of just over 3% but holding on to weekly gains of nearly 5%.
Altcoins, which had surged even more aggressively during the rally, are seeing sharper reversals. Solana, still up more than 11% on the week, is down over 5% in the past day. XRP is hovering just under $3, losing 3.5% daily, while Cardano and BNB are also in the red. Dogecoin, which led with double-digit weekly gains, has fallen close to 10% in the last 24 hours. The correction underscores how sensitive the crypto market remains to central bank expectations, with volatility amplified as traders brace for the Fed’s next move.
The backdrop, however, is anything but straightforward. Inflation remains stubborn across several categories, from food and vehicles to airline fares, even as the labor market shows signs of strain. Jobless claims recently hit their highest level in nearly four years, while payroll growth slowed to just 22,000 in August. For Fed Chair Jerome Powell, that creates a delicate balancing act: cut too cautiously and risk a deeper jobs downturn, or move too aggressively and reignite price pressures. The central bank’s new “dot plot” projections, due alongside the policy decision, may offer clues about how unified policymakers really are. In June, officials were deeply divided, with some seeing no cuts at all in 2025.
Despite the short-term pullback, altcoins remain central to the market narrative. Their bigger swings compared to Bitcoin reflect both investor appetite for higher-risk plays and the fragility of sentiment. Solana and Dogecoin, which had outperformed in the rally, now highlight how quickly fortunes can reverse. Bitcoin’s dominance has eased slightly in recent weeks, but unless it can break through resistance near $120,000, the spotlight may continue shifting back and forth between majors and smaller tokens depending on Powell’s tone.
Stocks, by contrast, have been slower to react. Wall Street ended last week with more record highs, but gains were measured as investors waited for clarity from Powell. The Dow Jones notched its first winning week in three, while the S&P 500 and Nasdaq delivered their strongest runs since early August. Treasury yields are pinned near recent lows and gold has climbed to new records, underscoring just how sensitive markets are to the Fed’s next step. Beyond monetary policy, investors are watching for fresh data on retail sales, jobless claims, and manufacturing, as well as earnings from bellwethers like FedEx and Lennar.
Even with equities holding steady, Wall Street analysts are striking an increasingly bullish tone. Deutsche Bank lifted its S&P 500 target to 7,000 for 2025, Wells Fargo sees 7,200 by 2026, and Barclays now projects 6,450 next year. Many of these upgrades cite artificial intelligence spending as a key driver, a theme reinforced last week when Oracle’s stock jumped over 30% after projecting that its AI-related cloud revenue could soar to $144 billion by 2030. The AI boom, in their view, remains the backbone of the next leg of the bull market.
That leaves two parallel narratives heading into a pivotal week. Crypto traders, emboldened by expectations of easier policy, had pushed prices higher but are now pulling back as the decision nears. Equity markets, while buoyant, are more cautious, waiting for the Fed’s words before making their next big move. If Powell delivers dovish guidance, digital assets could accelerate sharply again, pulling stocks higher in their wake. If not, the unwind could be just as swift, with altcoins most at risk of a deeper correction.
For now, all eyes are on the Fed – but it is crypto, not Wall Street, that continues to set the tone for risk sentiment.
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