Crypto Braces for Impact as Fed Rate Cut Hopes Collapse
Fresh labor data has sharply reduced expectations for a Federal Reserve rate cut in July — a development that could shake up the crypto market in the coming weeks.
According to the CME FedWatch Tool, the likelihood of a rate reduction has dropped below 5%, down from 25% just days earlier. The shift follows a surprisingly strong June jobs report showing a lower-than-expected unemployment rate of 4.1% and the addition of 147,000 jobs, mainly in government and healthcare.
Bond markets reacted quickly, with 10-year Treasury yields climbing to 4.36% as investors recalibrated expectations. Rising yields typically dampen demand for risk assets like crypto, which thrive in lower-rate environments where liquidity is more abundant.
Critics, including economist and crypto skeptic Peter Schiff, argued that the job gains were concentrated in “non-productive” sectors, warning of continued deficits and inflation. Still, the Fed now has little incentive to ease policy in the short term.
That’s unwelcome news for digital asset markets. Higher rates make traditional instruments like bonds more attractive, potentially pulling capital away from cryptocurrencies.
Yet, not everyone is bearish. Analysts point to a rising global money supply, a weakening dollar, and growing U.S. debt — all factors that could eventually drive interest back into crypto. Bitcoin, in particular, has gained traction as a hedge against fiat debasement, with some predicting a long-term push toward $170,000.
As rate cuts retreat further into the distance, the question remains: will crypto weather the tightening storm — or benefit from the cracks forming in the legacy financial system?
Alexander Stefanov
Reporter at Coindoo
Alex is an experienced financial journalist and cryptocurrency enthusiast. With over 8 years of experience covering the crypto, blockchain, and fintech industries, he is well-versed in the complex and ever-evolving world of digital assets. His insightful and thought-provoking articles provide readers with a clear picture of the latest developments and trends in the market. His approach allows him to break down complex ideas into accessible and in-depth content. Follow his publications to stay up to date with the most important trends and topics.
