The odds of a Federal Reserve interest rate cut in September surged following a surprisingly weak U.S. jobs report, reigniting bullish sentiment across crypto markets heading into a traditionally volatile trading season.
What Happened: According to Polymarket data as of August 1, there is now a 70% chance the Fed will cut rates by 25 basis points at its September 17 meeting, a significant jump from just days prior.
Meanwhile, bets on a 50-basis-point cut stand at 6.8%.
This comes after the U.S. economy added only 73,000 jobs in July, far below the consensus estimate of 110,000.
Markets were further rattled by a downward revision of 258,000 jobs from May and June, the sharpest two-month downgrade since the onset of COVID-19 in 2020.
The unemployment rate ticked up to 4.2%, while wage growth remained stronger than expected at 0.3% month-on-month and 3.9% year-on-year.
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Why It Matters: For crypto investors, these signals are meaningful.
"This is absolutely a game changer," Greg Magadini, Director of Derivatives at Amberdata, told Benzinga. "The Fed has had the luxury of holding rates higher-for-longer because the jobs market remained strong. That narrative is now in question."
Magadini explained that the sharp revisions and weak July headline caught markets off guard, pushing the U.S. dollar lower and sending bond yields falling.
"This gives the Fed room to cut without appearing to cave to political pressure," he said, referring to the Trump administration's public criticism of Fed Chair Jerome Powell.
Speaking with Benzinga, Anndy Lian, a blockchain advisor and author, said the rate cut odds lean favorably for crypto.
"Lower interest rates reduce the opportunity cost of holding non-yielding assets like Bitcoin (CRYPTO: BTC) and Ethereum (CRYPTO: ETH)," he noted, but added that the market's reaction will also depend on how the Fed communicates its strategy.
The shift in expectations is playing out in prediction markets.
Data from Polymarket shows a sharp rise in bets favoring a September rate cut.
A separate contract for a December decision also now leans heavily toward further easing, with over 60% expecting another 25-basis-point cut.
Tom Bruni, VP of Community at Stocktwits, noted that crypto is entering a seasonally weak window from August through mid-October.
"We've already seen ‘good news' fail to drive prices higher. With the Fed now more likely to ease, that could support prices — but only if economic deterioration doesn't accelerate into something more serious."
Sunil Raina, CEO of CereBree, echoed those thoughts: "Unless the Fed wants to risk breaking the economy, a September rate cut now looks like the only sensible move." But he warned that inflation and geopolitical risks remain, keeping volatility elevated.
What’s Next: In the background is a deeply divided Fed navigating political pressure.
President Donald Trump has continued his public attacks on Powell, calling him a "stubborn MORON" in a Truth Social post and urging the Federal Reserve Board to intervene directly.
While the Fed has so far resisted acting prematurely, the weakening labor data may offer cover to make a policy shift without appearing politically compromised, a dynamic that could heavily influence the path of Bitcoin and risk assets in the coming weeks.
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