Fed Rate Cut Probability in July Down Below 5%… Will It Have a Negative Impact on Cryptocurrency Prices?

According to the latest CME FedWatch data, the possibility of a Federal Reserve rate cut in July has sharply dropped to below 5% due to a better-than-expected employment report.

This change could pose a challenge to the cryptocurrency market. As the likelihood of a rate cut decreases, cryptocurrencies may become less attractive to investors.

Federal Reserve Rate Cut Possibility Drops... Coins Face New Risks

According to the June US employment report from the US Bureau of Labor Statistics, the unemployment rate dropped from 4.2% in May to 4.1%, lower than the expected 4.3%.

"The US unemployment rate fell to 4.1% in June, which is the lowest since February. This is significantly lower than the historical average of 5.7%." – Charlie Bilello, economic analyst wrote.

Employers nationwide added 147,000 jobs in June, which aligns with the previous year's monthly average of 146,000 job increases.

Sectors with job growth were state government jobs and healthcare. In contrast, the federal government experienced job losses.

"Of the 147,000 jobs created in June, 92% were in government, healthcare, and social services. Manufacturing continues to lose jobs. These unproductive jobs increase trade deficits, government debt, and inflation. Investors will not be fooled forever." – Peter Schiff, economist and Bitcoin critic wrote.

Despite the criticism, the bond market reacted quickly. After the report, the 10-year Treasury yield rose to 4.36%. Why did this happen?

Because the economy is performing well, investors are less worried about the future and want to invest in safe options like US Treasury bonds. As more people buy bonds, their interest rate (yield) increases.

Moreover, these strong economic indicators suggest that the Federal Reserve may have fewer reasons to cut rates in July. The CME FedWatch tool demonstrated this change. The likelihood of a July rate cut dropped from 25% to 4.7%.

"The possibility of a July Federal Reserve rate cut has plummeted from 25% to less than 5%. Why? Inflation from tariffs and a surprising employment report are keeping the Fed on hold. No rate cut = risky assets must be maintained carefully." – Cryptocurrency educator, Cryptosrus posted.

Since December, the Federal Reserve has maintained rates between 4.25% and 4.5%. This provoked backlash from President Trump. He even threatened to fire Federal Reserve Chair Jerome Powell, but Powell stood his ground.

Meanwhile, changes in rate expectations could create headwinds for the cryptocurrency market. Higher rates make traditional investments like bonds more attractive, potentially diverting attention from risky assets like cryptocurrencies. Consequently, decreased demand could pressure prices.

Despite the current economic challenges, several upward factors remain in the market. According to Cryptosrus, particularly for BTC, global money supply has recently surged to $55.48 trillion. Additionally, the US dollar recorded its worst first half performance since 1973.

According to prediction platform Kalshi, US total debt is expected to reach $40 trillion this year.

Therefore, growing national debt and concerns about inflation and government spending could make BTC an increasingly attractive hedge.

"Looking at global M2 trends, Bitcoin's price seems not far from $170,000. Fiat currency is continuously expanding. BTC is keeping an eye on this pace." – Cryptosrus stated.

As the traditional financial system faces pressure, Bitcoin and other digital assets can offer an attractive option for investors seeking protection and diversification against economic instability.