Asia-Pacific Morning Post: Fed's interest rate cut did not boost Bitcoin, Powell denies the start of a new rate-cutting cycle, this week's focus shifts to speeches from several Fed officials.

Last week, the highly anticipated Fed rate cut finally became a reality, but the price of Bitcoin did not rise as expected; instead, it briefly fell below $115,000, which sharply contrasts with the 1.7% surge in the Nasdaq index during the same period. Fed Chair Powell defined this rate cut as a “risk management rate cut” to address the weak employment data and denied the start of a new rate-cutting cycle. This week, the market's focus will shift to the speeches of several Fed officials, whose remarks may bring new volatility to the current weak market sentiment.

Market Review: Rate cuts failed to boost Bitcoin, Powell denies a new rate cut cycle

Last week, the Federal Open Market Committee (FOMC) meeting was one of the most significant events of the month. The Fed lowered the federal funds rate by 25 basis points to 4.0%-4.25%, a move that received support from most policymakers. In the post-meeting press conference, Fed Chairman Powell characterized this rate cut as a preemptive measure in response to weak employment data.

When asked by reporters whether the Fed is starting a new rate cut cycle, Powell clearly stated that this is a “Risk Management” rate cut. He added that the Fed will decide the future interest rate trend based on data at each meeting. Since the beginning of August, risk asset investors have been anticipating consecutive rate cuts by the Fed. However, real-time price data from the Binance exchange showed that when Powell made the above remarks, the price of Bitcoin fell below $115,000.

The “risk” referred to by Powell is the potential contraction of the labor market. The U.S. non-farm payroll data for July was far below market expectations, and the latest report for August shows that only 22,000 new jobs were added, marking a historical low. Although the unemployment rate seems to be stable at 4.3%, the nature of the employment data necessitates preemptive rate cuts, as once it begins to soften, its deterioration will be very rapid.

Fed remains optimistic about the long-term outlook

The Fed's economic forecast remains optimistic, predicting that economic growth will exceed potential levels next year. This indicates that the rate cut was entirely a precautionary measure taken out of concern for the labor market. Powell's denial of a “rate cut cycle” quickly cooled the enthusiasm of crypto investors who held high expectations and chased prices. This is also why Bitcoin's price returned to its starting point within three days after the rate cut. According to the CME Group's FedWatch tool, the market still expects two rate cuts starting in October. However, the expectation for rate cuts in 2026 has been revised down from three to two.

If the employment data in October or December improves, there may be strong reasons within the Fed to pause further rate cuts. This possibility is particularly pronounced considering that inflation remains well above the 2% target. In this case, expectations for rate cuts in 2026 may further weaken.

Altcoin Trends Diverging: Individual Positive News Driving the Rise

Compared to the relatively stable price of Bitcoin, Ethereum (ETH) still fell by 4.25% last week despite continuous inflows of US spot ETFs and institutional funds. The performance of altcoins showed divergence due to individual news. Solana (SOL), which had a strong weekly rise of nearly 20% two weeks ago, fell by 2.25% last week. Meanwhile, Binance Coin (BNB) surged by 11.80% in a week. This was due to Binance CEO Zhao Changpeng (CZ) removing the word “former” from his X account profile, sparking rumors of his possible return to Binance. Cryptocurrencies listed on South Korean exchanges Upbit and Bithumb also saw significant gains due to their strong retail market, including Euler (EUL), Plume (PLUME), and Toshi (TOSHI), which experienced brief but sharp price spikes.

This Week's Outlook: Fed Officials Take Turns to Speak, Their Remarks May Cause Market Fluctuation

This week will see the release of several key economic data, including Tuesday's S&P U.S. Services and Manufacturing PMI preliminary values, as well as Friday's PCE inflation and personal consumption expenditure data. However, the real focus will be on the speeches of Fed officials. The “dot plot” released after the September FOMC meeting revealed a wide divergence among officials regarding the future direction of interest rates, so their public speeches could trigger market fluctuations.

Stephen Miran, a member of the Fed, was the only one advocating for a 50 basis point rate cut at the September FOMC meeting, and he will deliver a speech this Monday. It is believed that he also estimated a total rate cut of 175 basis points before the end of this year in the dot plot. On the same day, Cleveland Fed President Beth Hammack and Richmond Fed President Tom Barkin are also scheduled to speak. Hammack is believed to have voted against any rate cuts this year, keeping the market on alert.

Other important speeches are scheduled for Tuesday, with Fed Vice Chair for Supervision Michelle Bowman and Fed Chair Jerome Powell set to speak; on Thursday, Chicago Fed President Austan Goolsbee will also weigh in. Their remarks may bring Fluctuation to Bitcoin prices, which are currently in a weak sentiment.

I hope investors can gain something this week.

Conclusion

Last week's interest rate cut has set a tone of “Risk Management” for the market, rather than initiating an aggressive rate-cutting cycle. The Fed's cautious stance and concerns about employment data have temporarily suppressed the upward momentum of major crypto assets like Bitcoin and Ethereum. However, this is just the first act. This week, the market will enter a “speech season” where Fed officials will take turns to speak. Each of their statements could bring new directional signals to the market. The current consolidation and weak sentiment are accumulating energy for a potential Fluctuation. Investors must closely monitor the positions of these officials, as their differing views may determine the market's direction in the short term, while the final economic data will provide key guidance on whether Bitcoin can regain upward momentum.