Fed Rate Cut in June All But Certain? March CPI Rises Just 2.4%, Below Forecasts as Markets Price in Near-100% Probability
Recently, global markets were left stunned by the dramatic swings in U.S. stocks. After plunging sharply on news of “reciprocal tariffs,” the market reversed course and surged when the White House announced a 90-day suspension of tariffs on certain countries. The Dow Jones Industrial Average soared more than 2,900 points, a 7.87% gain — its biggest one-day jump since March 25, 2020. The S&P 500 rallied 9.52%, marking its largest gain since October 29, 2008, while the Nasdaq spiked 12.16%, notching the second-largest single-day gain in its history.
The “Magnificent Seven” tech giants all soared, with their combined market cap increasing by a staggering $1.85 trillion in just a matter of hours.
This kind of rhythm must feel all too familiar. That’s right — it’s the same kind of price action we often see in altcoins. Many market analysts couldn’t help but exclaim: “U.S. stocks are swinging like altcoins. The world is one giant pump-and-dump.”
Yet the surprises from the U.S. didn’t stop there. The March CPI data came in way below expectations: year-on-year growth was just 2.4%, missing forecasts, and the month-on-month figure even dropped by 0.1%. Core CPI was equally disappointing, hitting a four-year low. The unadjusted year-over-year core CPI for March came in at 2.8%, declining for the second straight month and marking the lowest level since March 2021 — falling short of the 3.0% market forecast.
These two sets of data not only defied market expectations but also prompted investors to reassess the Federal Reserve’s policy outlook. The market’s response was swift:
Spot gold initially spiked $6 before pulling back;
The U.S. Dollar Index slipped 20 points in the short term;
GBP/USD extended its intraday gains to 1.00%.
In the face of such data, a significant number of market analysts now believe a Fed rate cut in June is all but certain.
Harriet Torry, an economist at The Wall Street Journal, noted that under normal circumstances, a slowdown in year-over-year CPI growth would be considered welcome news.
Naturally, this also bodes well for the crypto market. As the Fed’s benchmark interest rate retreats, the crypto space could see a fresh wave of value re-evaluation.
The Relative Pricing Effect of Lower Risk-Free Rates
The yield on the U.S. 10-year Treasury note has fallen from its 2023 peak of 4.8% to 4.28% (with a recent low of 4.18% before rebounding by 10 basis points in the past few days). Shrinking returns on traditional fixed-income assets have pushed capital toward higher-risk assets. Take Bitcoin as an example — its correlation with Treasury yields was as low as -0.73 in 2023. The opportunity cost of holding crypto assets drops significantly in a rate-cut cycle, thereby increasing their appeal. According to Goldman Sachs models, every 25 basis point rate cut could push Bitcoin’s market cap up by 6–8%.
Reinforced “Digital Gold” Narrative
Bitcoin’s 90-day correlation with gold rose from 0.12 in 2023 to 0.35, peaking at 0.68 during the Silicon Valley Bank crisis. When rate cuts coincide with rising recession risks, the safe-haven value of crypto assets may be re-evaluated. A report by Grayscale points out that a 1% drop in real interest rates could raise Bitcoin’s valuation baseline by 15%.
Liquidity Injection from Rate Cuts
Historically, Fed rate-cutting cycles are often accompanied by broad-based asset price increases. As liquidity eases and capital costs decline, investor appetite for risk assets grows — this is especially pronounced in the crypto market.
As high-volatility and high-risk instruments, crypto assets are highly sensitive to liquidity shifts. When the Fed signals monetary easing, idle capital tends to chase higher returns, and crypto assets — with their strong return potential — quickly become a focus.
The Economic Case for Deflationary Tokens
Against expectations of fiat currency debasement, the scarcity premium of fixed-supply cryptocurrencies becomes increasingly prominent. This built-in deflationary feature adds anti-inflation appeal during a rate-cut cycle.
Catalysts for Institutional Adoption
Rate Cuts Amplify the “Asset Shortage” Phenomenon
Lower interest rates reduce yields in traditional financial markets (e.g., bonds, money market funds), creating reallocation pressure for institutions. Long-term investors like insurers, pension funds, and family offices may divert part of their capital toward growth-oriented emerging markets.
With regulatory infrastructure — such as ETFs, custody, and auditing — steadily maturing, crypto assets are becoming increasingly viable for compliant investment. As rate cuts lead to muted returns in traditional markets, institutions are likely to include Bitcoin and Ethereum in diversified portfolios.
Crypto ETFs in Sync with the Rate-Cut Cycle
By the end of 2024, several spot Bitcoin ETFs were approved for listing in the U.S., marking a pivotal moment for institutional money to enter the crypto space openly. If rate cuts coincide with the ETF boom, we could see a dual momentum of institutional inflows and macro liquidity expansion — further amplifying the crypto market’s upside potential.
On-Chain Activity Revival Across the Crypto Ecosystem
DeFi Market Reawakens
During the rate-hiking cycle, DeFi platforms struggled to compete with low-risk returns from U.S. Treasuries, leading to a decline in TVL (total value locked). As risk-free yields fall, DeFi returns become more attractive again, drawing capital back in.
Leading protocols like Compound, Aave, and Lido are already showing signs of TVL recovery. As on-chain lending rates stabilize and stablecoin interest spreads widen, capital efficiency improves — enhancing liquidity across the DeFi ecosystem.
NFT and GameFi Markets See Renewed Interest
Rate cuts free up capital, reviving user enthusiasm for high-volatility, high-engagement assets like NFTs and GameFi tokens. Historically, NFT market activity has lagged behind Bitcoin rallies and typically explodes in the second phase of a bull market. Fed rate cuts may open new upside potential for these application-layer assets.
Conclusion
In sum, Fed rate cuts are laying the macro foundation for a new crypto market upcycle. From liquidity injection and capital reallocation to institutional entry, on-chain activity, and financing environments — rate cuts present systematic tailwinds for the crypto sector.
As the Fed opens the liquidity floodgates, crypto assets are evolving from speculative fringe assets into mainstream macro allocation tools. This transformation is being driven by both traditional financial giants and breakthroughs in underlying technology — alongside intense market cleansing and value reconfiguration.
Of course, the market won’t turn overnight. Regulatory clarity, tech infrastructure, and security challenges still need to be addressed. But under the dual engine of “monetary easing + asset innovation,” the crypto market could be poised for a new structural rally in the coming year. For investors and builders alike, understanding the policy cycle and market tempo will be key to navigating both bull and bear.
