Expectations for interest rate cuts rise in September. Can the crypto market break the "August curse"?

Introduction

On the evening of August 6, Jinse Finance's Twitter Space focused on the topic of "With the probability of interest rate cuts soaring in September, can Bitcoin break the August downtrend curse and exceed 150,000?" Several industry guests were invited to engage in an in-depth discussion on hot topics such as interest rate cut expectations, Bitcoin trends, global inflation risks, the regulatory direction in the United States, and stablecoin policies.

The guests participating in this discussion include: kiki, the head of the Twinkle market, veteran trader Crypto Monkey, industry veteran Jessie, and digital banking practitioner Si Cheng.

Rising Expectations of Interest Rate Cuts: Is the August Market Heating Up Early? Or Waiting for Confirmation?

According to the FedWatch tool, the market currently expects a 94.4% probability of a 25 basis point interest rate cut in September. Has such a high expectation already been reflected in market sentiment? This topic has become the focus of the discussion.

The Monkey King stated that despite the current data and institutional predictions showing a high probability of interest rate cuts, "no one can be certain whether there will be a rate cut in September." He believes there are still performance opportunities in August, stating, "From a trading perspective, it will be volatile, but it won't drop too much nor will it rise too sharply."

He candidly said: "If you are a contract trader in August, I think you should be a bit cautious... If you are a secondary market trader, I wouldn't recommend getting involved right now, because the altcoins currently have no hotspots, no trends, and insufficient liquidity."

Kiki believes from a data perspective: "Such a high expectation of interest rate cuts may reduce the tension in the market, providing some support for Bitcoin, but the market has already reflected part of this sentiment in advance... Currently, trading volume continues to decline, and funds are relatively cautious."

She further pointed out: "The sideways movement in August is not very weak, but rather resembles a strong consolidation at a high level. Long-term holders have not significantly reduced their positions; essentially, they are waiting for a new catalyst, such as the implementation of interest rate cuts or the re-entry of ETF institutions."

Bitcoin: Is the sideways movement a buildup of strength or a lack of it?

Bitcoin has been consolidating below $120,000 for nearly a month, and the common question in the market is: Is this a buildup before a rise, or a decline period in the bull market?

Kiki holds a positive attitude towards this: "The current structure is healthy, unless it falls below the strong support of 110,000, I think it is a strong consolidation." She pointed out that on-chain data shows that "long-term holders have not significantly reduced their positions."

The Monkey King stated that this round of cycles could possibly be a "super cycle". He predicts that the long-term target price could reach $200,000, but it "won't happen overnight; it will be a slow and steady rise." As for the timing of the breakthrough, "no one can be certain, but the medium to long-term upward trend is definite."

Are Altcoins and Memecoins Still Viable?

When discussing the current performance of the secondary market, Monkey Brother did not shy away from expressing disappointment. In contrast, Monkey Brother believes that memecoins offer more short-term trading opportunities: "The memecoin sector is mainstream, and if you keep up with the trends, there are opportunities... The larger the weight and the greater the angle, the higher the ceiling."

He also mentioned, "For example, when Musk posts a tweet or a celebrity idol promotes something, the hype angle is high, and there are basically opportunities for waves, the key is 'not being greedy.'"

US Tariff Increases Inflation Pressure: Will Dollar Capital Flow into the Crypto Market?

When discussing whether the new round of tariff policies in the United States will drive up global inflation, leading to a capital shift from dollar assets to the crypto market, the guests have differing opinions.

Jessie holds a negative attitude: "The US dollar is too strong to flow out easily. The main storyline globally is still the confrontation between the Chinese and American financial systems; other countries can't compete with the dollar."

"The renminbi only accounts for 3% of global foreign exchange reserves. Let's not talk about capital outflows; that's unrealistic. The dominance of the US dollar is much stronger than we imagine."

Si Cheng then gave a more moderate judgment: "There may indeed be some capital flowing into the cryptocurrency market, but it will not directly buy Bitcoin or Ethereum, but will enter in a hierarchical manner, for example, first allocating to wealth management, stablecoins, and RWA-type assets."

He added: "Even if the interest rate cut is really implemented, it will take 12 months for the funds to flow into the cryptocurrency market, and it will not immediately reflect in the prices."

Is the SEC's Shift in Regulatory Attitude a Turning Point for Market Policy?

The recent launch of the "Project Crypto" by the U.S. SEC is seen as a turning point from repression to clear rules that support innovation. Guests generally believe that this series of measures has released positive signals.

Sicheng provided a detailed analysis of the policy: "From the Tether Act, the Stablecoin Act to Project Crypto, the underlying logic is to maintain the sovereignty of the US dollar and promote the compliance of the payment system."

He pointed out: "In the future, the United States may allow taxes to be paid with stablecoins, which has enormous fiscal revenue potential behind it. The SEC's shift is not accidental, but part of the entire national strategy."

Jessie gave high praise for this as well: "Project Crypto is the biggest regulatory benefit I've seen in many years... Stablecoins will restructure the logic of global financial payments, extending the hegemony of the US dollar."

She bluntly said, "Don't say attracting traditional institutions to enter the market, a whole bunch of institutions have already entered... In Hong Kong, almost every week there are traditional financial institutions holding closed-door meetings on virtual assets."

Cryptographic Payments, RWA, Stablecoins: The Next Wave is Brewing

Si Cheng specifically mentioned that the global application scenarios of stablecoins are rapidly expanding: "Its core advantages are settlement efficiency, low settlement costs, and smooth global payments... Compared to the SWIFT system, it has a generational crushing advantage."

He also mentioned, "The RWA project is also an emerging direction that has gained attention recently, such as Ondo and Maple... The core lies in connecting on-chain assets and off-chain credit."

Jessie believes that "stablecoins are not the 'scraps' we imagine, but the core pillar of future financial reform... This matter is essentially an extension of the U.S. government's promotion of dollar hegemony."

She encourages retail users to actively pay attention to these trends: "Don't feel like you can't participate just because stablecoins sound sophisticated. There are definitely paths for ordinary users to get involved in this field, such as crypto payment cards, overseas U cards, etc."

Conclusion: Where is the cryptocurrency market heading amidst macroeconomic benefits and narrative shifts?

The guests at this Space illustrated a cryptocurrency market at a critical juncture from multiple perspectives, including macroeconomics, market sentiment, regulatory shifts, and narrative changes. The discussion featured both rational macro judgments and real market sensations; steadfast beliefs in Bitcoin's long-term value alongside keen insights into short-term speculative opportunities. Jinse Finance will continue to monitor the evolution of the cryptocurrency market during the interest rate cut cycle, providing readers with the most cutting-edge interpretations and voices.

Live replay link:

Note: This article is based on the live discussion of the guests and does not constitute investment advice. The market carries risks, and decisions should be made with caution.