Now, Federal Reserve officials are calculating the hidden effects on interest rates of former President Donald Trump’s proposed tariffs. This bullishness of the assessment points to an upcoming trend change, which could be the catalyst that triggers a Bitcoin and altcoin market rally. With inflation continuing to cool off, the central bank is already looking at cutting interest rates as soon as its July meeting. Industry analysts think that this step would be a huge boon for cryptocurrencies.
Second, any significant reduction in interest rates would further lessen the opportunity cost of holding non-yielding assets such as Bitcoin. This has made assets like Bitcoin and altcoins harder to ignore for investors.
Christopher Waller and Michele Bowman, important members of the Federal Reserve, think that Donald Trump’s tariffs are unlikely to meaningfully impact inflation. This view certainly leaves the door open to a July rate cut being a distinct possibility. This decision would represent an enormous reversal for Federal Reserve Chairman Jerome Powell. For one, he had publicly signalled a lack of enthusiasm about going first and early with interest rate cuts.
"I really can’t say. It’s going to depend on the data. And we are going meeting by meeting. I wouldn’t take any meeting off the table or put it directly on the table. It’s going to depend on how the data fall." - Jerome Powell
Low interest rates tend to make investors more risk-seeking. During the COVID-19 pandemic, interest rates were lowered to near-zero, resulting in a tremendous increase in investment in higher-risk assets.
The anticipated Federal Reserve rate cut may coincide with the passage of Donald Trump's "Big Beautiful Bill," which proposes tax cuts and deregulation measures. All of this combined can lead to added positive economic stimulus and investor sentiment for both Bitcoin and altcoins.
Now major financial institutions are getting in the act, opining on the direction of interest rates. Goldman Sachs now predicts three interest rate cuts this year, starting this month. In turn, Morgan Stanley expects there to be as many as seven cuts as soon as 2026.
As we write this, the chances of a July cut are 17%, per Polymarket data. Contrary to our assessment, the consensus view is for a rate cut in September, with the probability of that outcome above 75%.
