As the US Federal Reserve prepares to adjust interest rates on Wednesday, a broader shake in the central bank can have serious implications for crypto markets.
It is expected that the Fed will cut interest rates tomorrow, with a tradition that has traditionally indicated a rally in crypto markets: lower yields in properties such as bonds mean riskier assets such as crypto are more attractive -attract.
The expected rate of rate came in the middle of a political battle and a new federal reserve appointment. US president administration Donald Trump has been charged by Governor Lisa Cook with mortgage fraud like this Looking for his removal. Meanwhile, the Senate confirmed the White House Economic Advisor Stephen Miran In the Board of Governors.
Charges against Cook and the effort to nominate an individual -related individual can mean a less independent federal reserve, which plays an important role in setting the crypto policy.
What does a political federal reserve mean for crypto policy
The Trump administration is seeking to remove the cook-an appointment of Biden-era-because it aims to make more control over the federal reserve. On August 25, the White House X page posted a letter in which Trump fired the cook, accusing him of making false statements to one or more mortgage agreements.
Cook denied the accusations and refused to go down. His legal team Says The charges were encouraged by politics and that the White House “scrambled to invent new justifications for excessive hope.” Cook himself said it was “never happened and illegal.”
On Monday, the appeal court in Washington Na -block The White House from removing the cook from its position in the Federal Reserve. He will be allowed to maintain his post while the case is pending.
This morning, Miran, a economist and chairman of the Council of Economic Advisors, who also made some pro-crypto comments in the past, have been confirmed by the Senate.
Temporarily his position – the term ends in January 2026 – but Miran has declined To promise to drop as a White House advisor if his term exceeds January 31.
Democratic legislators remember that the Fed and its financial policy agenda will be more visible in Trump’s political goals.
Related: Trump renews pushing to eliminate Fed’s cook in advance at the expected cutting rate
Aaron Brogan, the founder of the firm-focused Brogan law, told Cointelegraph, “The Fed has a major authority to banks, and ultimately, banks are quasi-regulators of the crypto industry by determining who can and cannot access financial services.”
“That influence is not likely to go down to a less independent fed, but the policy may be. I want it to be more changing and susceptible to public whims.”
A politicized fed is relatively unspecified territory. When asked what a less independent Fed meant for US financial policy, Brogan said, “No one knows.”
“There is an assumption that a dependent Fed will have more liberal, propligating financial policy just because it is more responsive to public opinion, which is fickle. But since we have not seen it, it is pure speculation. In this administration, at least, Trump cuts the rates.”
Crypto Market prepares for Federal Reserve Rate Cut
As lawmakers in Washington fought against the fate of the central bank, crypto markets are preparing for the Fed meeting tomorrow, which is expected to reduce rates.
Kevin Rusher, founder of the real-world asset (RWA) borrowing and lending the RAAC ecosystem, told the cointelegraph that “the markets are on the side.”
“The continuation of the cutt cycle begins to unlock the $ 7.2 trillion sitting on the money market funds, as well as trillions tied to the remaining mortgage debt.”
He foretold that liquidity flows into alternative investments that make up yields such as those in decentralized finances (DEFI) and Rwas.
Alice Liu, the leading research on CoinMarketCap, told Cointelegraph that the “high-beta layer 1s” such as Ether (Eth) and Solana (Sol) specifically affected by changes in Fed’s interest rate.
“Trading such as tech-more tech-more sensitive to liquidity and appetite than BTC. Especially if interest rates can potentially trigger additional capital injected with risky assets, investors may look at eliminating additional capital in the ‘digital’ narrative of ETH or Sol’s adoption,” he said.
He said the Defi tokens were “a bit more attractive -attractive” when interest rates collapsed, the strengthening of tokens tied to lending/Dex activity. “Bitcoin is still” still the quality of the crypto “and is less sensitive to the rate of interest rate changes but can still move” around the major surprises of policy and the turn of liquidity. “
The Kobeissi letter write“When Fed cuts rates within 2% of all times high, the S&P 500 usually loves it.” While the immediate results were mixed, “by 20 in the last 20 times this happened, the S&P 500 graduated higher 1 year later.”
They also look forward to the same outcome at this time. “There will be more immediate volatility, but the owners of the long-term asset will party.”
“Gold and Bitcoin know this. The straight line of the higher price we have seen in these asset classes is the pricing-in what’s coming. Gold and Bitcoin know that lower rates in a hot backdrop will only push assets.
The political battle for the Fed is still unspecified, but regardless of pulling levers, low interest rates are a welcome sight for entrepreneurs.
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