Expectations of a September rate cut are rising. Can the crypto market break the “August curse”?

Introduction

On the evening of August 6th, Golden Finance's Twitter Space focused on the topic, "With the probability of a September rate cut rising sharply, can Bitcoin break its August decline and break through 150,000?" The forum invited several industry guests to engage in in-depth discussions on hot topics such as rate cut expectations, Bitcoin trends, global inflation risks, US regulatory trends, and stablecoin policies.

Participating guests included Twinkle Market Director Kiki, veteran trader Crypto Monkey, crypto industry veteran Jessie, and digital banking practitioner Sicheng.

Rising Expectations of a Rate Cut: Is the Market Pre-Feeting in August? Or Waiting for Confirmation?

According to the FedWatch tool, the market currently expects a 94.4% probability of a 25 basis point rate cut in September. Is such a high expectation already priced into market sentiment? This topic became the opening focus.

Hou Ge said that although the current data and institutional forecasts indicate a very high probability of an interest rate cut, "no one can be sure whether there will be an interest rate cut in September." He believes that there are still performance opportunities in August. "From a trading perspective, there will be fluctuations, but they will not fall too much or rise too sharply." He admitted: "If you are a contract-based player in August, then I think you should be cautious... If you are a secondary trader, I don't recommend touching it now, because there are no hot spots, no trends, and insufficient liquidity in altcoins." Kiki believes from a data perspective: "Such high expectations of interest rate cuts may reduce market tensions and provide some support for Bitcoin, but the market has already reflected some of the 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 a weakness. It is more like a strong consolidation at a high level. Long-term holders have not significantly reduced their positions. In essence, they are waiting for a new catalyst, such as the implementation of an interest rate cut or the re-entry of ETF institutions." Bitcoin: Is the sideways movement accumulating strength or is it a sign of exhaustion? Bitcoin has been trading sideways below $120,000 for nearly a month, raising questions in the market: Is this a buildup of momentum before a surge, or a bull market downturn? Kiki expressed optimism, stating, "The current structure is healthy. Unless it falls below the strong support level of $110,000, I believe it will be a period of strong consolidation." She noted that on-chain data shows "long-term holders haven't significantly reduced their holdings." Monkey Brother, however, stated that this cycle could be a "supercycle," predicting a long-term target price of $200,000. However, he predicted this price would likely not happen overnight, but rather through a gradual, steady rise. Regarding the timing of a breakout, "no one can be certain, but a medium- to long-term upward trend is certain." Do altcoins and memecoins still have a chance?

When discussing the current performance of the secondary market, Monkey Brother expressed his disappointment. In comparison, Monkey Brother believes that memecoin has more short-term trading opportunities: "Memecoin is a mainstream track. If you follow the hot spots closely, there will be opportunities... The greater the weight and the larger the angle, the higher the ceiling."

He also mentioned, "For things like Musk sending a tweet or celebrities promoting it, the hot angle is high, and there are basically opportunities for swing trading. The key is to 'not be greedy.'"

US tariffs increase inflationary pressure: Will US dollar capital flow into the crypto market?

When it comes to whether the new round of US tariff policies will push up global inflation, thereby causing capital to flow from US dollar assets to the crypto market, the guests have different views.

Jessie holds a negative attitude: "The US dollar is too strong and it is impossible for it to flow out easily. The main global storyline is still the confrontation between the Chinese and US financial systems. Other countries cannot match the US dollar."

"The renminbi accounts for only 3% of global foreign exchange reserves. Don't talk about capital outflow, this is unrealistic. The hegemony of the US dollar is much stronger than we imagined."

Sicheng gave a more moderate judgment: "It is true that some funds may flow into the crypto market, but they will not buy Bitcoin or Ethereum directly. Instead, they will enter in a hierarchical manner, such as first allocating wealth management, stablecoins, and RWA assets."

He added: "Even if the interest rate cut is really implemented, it will take 12 months for the capital inflow into the crypto market to be transmitted, and it will not be immediately reflected in the price."

Is the change in the SEC's regulatory attitude a turning point in market policy? The US SEC's recent launch of "Project Crypto" is considered a policy turning point, moving from suppression to clear rules and support for innovation. Guests generally believed that this series of measures sent a positive signal.

Sicheng gave a detailed review of the policies: "From the Rooftop Act, the Stablecoin Act to Project Crypto, the underlying logic is to safeguard 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 the use of stablecoins for tax payment, which will bring huge fiscal benefits. The SEC's shift is not accidental, but part of the overall national strategy."

Jessie also spoke highly of this: "Project Crypto is the biggest regulatory benefit I have seen in all these years...Stablecoins will reshape the logic of global financial payments and are an extension of the US dollar hegemony."

She bluntly stated, "Forget attracting traditional institutions to enter the market. A large number of institutions have already entered the market...In Hong Kong, traditional financial institutions hold closed-door meetings on virtual assets almost every week."

Crypto payments, RWAs, stablecoins: The next wave is already brewing

Sicheng specifically mentioned that the global application scenarios of stablecoins are rapidly expanding: "Its core advantages are clearing efficiency, low settlement costs, and smooth global payments... Compared to the SWIFT system, it has a generational advantage." He also mentioned, "RWA projects are also an emerging area. Recently, projects like Ondo and Maple have garnered attention... The core lies in connecting on-chain assets and off-chain credit." Jessie further believes that "stablecoins are not the 'leftovers' we imagine, but rather a core pillar of future financial reform... This is essentially an extension of the US government's promotion of dollar hegemony." She encouraged retail users to actively pay attention to these trends: "Don't think that stablecoins sound too high-end and you can't participate. There are definitely ways for ordinary users to enter this field, such as crypto payment cards and overseas U cards." Conclusion: Where is the crypto market heading amidst macroeconomic factors and narrative shifts?

The guests on this Space event portrayed a crypto market at a critical juncture, drawing on multiple perspectives, including macroeconomics, market sentiment, regulatory shifts, and narrative shifts. Their discussions showcased both rational macroeconomic judgments and real-world market insights; a firm belief in Bitcoin's long-term value and keen insight into short-term speculative opportunities. Golden Finance will continue to monitor the evolution of the crypto market during this period of interest rate cuts, providing readers with the latest insights and insights.

Livestream Replay Link: https://x.com/i/spaces/1djxXVVVjkOGZ

Note: This article is based on the guests' livestream discussion and does not constitute investment advice. Markets are risky, so decisions should be made with caution.