Bessent Calls for Sharp Rate Cut – What Could This Mean for Cryptocurrencies?

U.S. Treasury Secretary Scott Bessent surprised financial markets this week by openly calling on the Federal Reserve to cut interest rates by 50 basis points at its September meeting. According to him, the trigger for such a bold move lies in the “fantastic” fresh inflation data and revised employment statistics.

Data Revision and Political Tensions The Bureau of Labor Statistics (BLS) revised employment data for May and June down by a total of 258,000 jobs. Shortly after these numbers were released, President Donald Trump dismissed BLS Commissioner Erika McEntarfer, accusing her of deliberately manipulating data to undermine his administration. Bessent added that if markets had received the “correct” figures earlier, the Fed could have started cutting rates as early as June or July. Now, he believes a half-point cut in September should be seriously considered.

Why This Matters for Markets – and Especially for Crypto Lower interest rates mean cheaper borrowing, more money in circulation, and greater investor appetite for risk. This often drives capital not only into equities but also into cryptocurrencies, which can offer potentially higher returns. “A 50-basis-point cut would cement a risk-on sentiment for the rest of the year,” said Ryan McMillin, Chief Investment Officer at Merkle Tree Capital, a firm managing crypto funds.

Crypto Already Reacting BLS data also showed that July inflation rose 2.7% year-over-year, 0.1 percentage point above analysts’ expectations. Markets responded quickly – several blue-chip digital assets reached multi-week highs, while Ethereum climbed to its highest level in years. According to McMillin, it’s now almost certain that the Fed will cut rates by at least 25 basis points in September. The final decision, however, will depend on additional August employment and inflation data.

Risks and Uncertainty Past crypto bull runs have often been fueled by a combination of ETF inflows and lower interest rates, but the current situation is more complex. Geopolitical factors, seasonal patterns, and cautious investor behavior all play a role. Options market activity shows that buying put options – bets on a decline – remains the dominant theme, reflecting a cautiously optimistic mood. Statistics also show that over the past 12 years, the third quarter has had a median return of just 0.96%, leaving plenty of room for volatility.

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