Post-FOMC Crypto Rally is Likely, ‘Significant’ Chance of 50bps Cut – Mulhem
Financial analyst Suliman Mulhem has reiterated his warning that the US labour market is far weaker than the Federal Reserve believes, and says policymakers could vote in favour of a larger-than-expected interest rate cut at this week’s Federal Open Market Committee (FOMC) meeting.
Mulhem, who ahead of the July meeting cautioned that failing to cut rates then would likely necessitate a 50-basis-point reduction in September, also called on the Fed to impose a “tariff-inflation exclusion” and to treat tariff-driven price rises as transitory.
Speaking ahead of the upcoming September decision, Mulhem said markets and analysts are underestimating the chances of an aggressive cut by the Fed in September.
“Although markets are currently pricing in just a 3.6% chance of a 50bps cut at this week’s FOMC meeting, I believe there is a significant chance of the Fed voting in favour of a jumbo cut, as I don’t think a 25bps cut is sufficient to address the current weakness in the US labour market,” Mulhem said.
“However, even a 25bps cut – which already appears to be fully priced in by the market – would still be bullish for risk assets, such as crypto and equities, if it’s accompanied by Fed Chairman Jerome Powell being dovish and setting up further cuts in Q4.”
Mulhem argued that rate reductions would be particularly supportive of digital assets, pointing to both the liquidity effect and the unique role of corporate demand during the current cycle.
“The Federal Reserve cutting rates is typically bullish for cryptocurrencies, as it leads to liquidity flowing out of money market funds and other interest-bearing assets, into risk assets,” Mulhem said.
“Cryptocurrencies also benefit by virtue of a lower federal funds rate weakening the US Dollar, and therefore causing them to appear stronger in USD-denominated pairs.
“Furthermore, interest rate cuts are likely to be even more powerful during the current crypto cycle, as lower rates will make it easier for crypto treasury companies, such as Strategy and BitMine, to raise funds on favourable terms which they can use to continue to expand their respective BTC and ETH treasuries.
“Crypto treasury companies have been one of the largest demand sources for BTC and ETH in 2025, so the importance of them being able to raise additional capital more easily should not be underestimated.”
Mulhem’s remarks suggest that the Fed’s policy path in the coming months could have significant implications not only for traditional financial markets, but also for the trajectory of Bitcoin and Ether.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.
