Fed Rate Cuts Could Spark a Crypto Surge
So here’s what’s happening. There’s a lot of buzz right now around the Federal Reserve and the possibility of an interest rate cut, and according to well-known market strategist Tom Lee, this could be a huge deal for crypto investors. He shared his view on CNBC recently, saying that if the Fed does go ahead with the cut, Bitcoin and Ethereum could see a major rally within the next three months.
Now, this isn’t just speculation pulled out of thin air. Lee pointed to history for context. He compared the current setup to what happened in 1998 and again in 2024, when the Fed shifted from holding rates steady for a long period to finally cutting them. In both of those cases, markets responded strongly. His argument is that similar conditions are lining up again right now.
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The expectation going into this week’s FOMC meeting is that the Fed will lower its benchmark rate by 25 basis points, bringing it down to the 4.00%–4.25% range. Why? Because the U.S. labor market has been cooling, and unemployment has crept up to 4.2%. That softening in the economy has created pressure for the Fed to act.
So, who stands to benefit the most if this rate cut happens? Lee said the biggest winner would probably be the Nasdaq 100, especially the so-called “Magnificent Seven” tech stocks and AI-related names. But right behind that, he highlighted Bitcoin and Ethereum. In his words, these assets tend to be highly sensitive to central bank easing, and when you combine that with seasonal market strength heading into the end of the year, he expects what he called “monster moves.”
It’s not just Lee making the call. His colleague Mark Newton, who leads global technical strategy at Fundstrat, weighed in specifically on Ethereum. Newton suggested that ETH might face a short-term dip this week, potentially down to around $4,375. But he also made it clear that the recent low of $4,233 shouldn’t be broken. Instead, he views this pullback as a healthy correction, and even a buying opportunity. By mid-October, he thinks Ethereum could reach as high as $5,500.
The broader takeaway here is that rate-sensitive assets are likely to come back into favor if the Fed turns dovish. Small-cap and financial stocks might get some love too, but Lee kept emphasizing that the two standout trades would be tech-heavy Nasdaq plays and, of course, crypto—especially Bitcoin and Ethereum.
So, if the Fed goes through with this cut, we may be looking at a perfect storm of easier money, seasonal strength, and investor enthusiasm driving the next big wave in digital assets. It’s definitely something to watch closely over the next few weeks.
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