As the dawn breaks over Asia today, cryptocurrency traders are bracing themselves for a pivotal moment in financial markets. With the U.S. Federal Reserve poised to initiate its much-anticipated easing cycle, all eyes are on how the decision will ripple through the crypto world, particularly Bitcoin (BTC) and Ethereum (ETH). As we stand on the cusp of this financial shift, the stakes are high, with both excitement and caution in the air.
BTC and ETH: Riding the Fed Wave
Bitcoin is currently trading at a robust $116,762, marking a 1.3% increase on the day and a 4.7% rise over the past week. Ethereum isn’t far behind, with a 4.3% weekly gain pushing its price to $4,502. The prospect of a 25 basis point cut by the Fed, as forecasted by platforms like Polymarket and CME FedWatch, has been a key driver of this bullish sentiment. With odds favoring a series of three cuts by the year’s end, the crypto market is buzzing with anticipation.
However, not everyone is diving headfirst into the market. Some traders are adopting a wait-and-see approach, wary of the potential market fluctuations that might follow the Fed’s announcement. CryptoQuant’s latest data reveals a significant drop in BTC exchange inflows, now at a 7-day average of just 25,000 BTC—the lowest in over a year. Similarly, ETH inflows have fallen to a two-month low, indicating that major holders are holding their assets rather than selling.
Stablecoins: The Quiet Power Behind the Scenes
While BTC and ETH are being hoarded, stablecoins are making waves. Tether (USDT) deposits into exchanges surged to $379 million at the end of August, maintaining high levels with $200 million still flowing in. This influx of stablecoins provides exchanges with the “dry powder” needed to support potential post-Fed rallies.
Yet, the influx isn’t uniform across the board. Altcoins are experiencing a resurgence in exchange activity, with transaction deposits reaching a 7-day total of 55,000. This divergence suggests that some investors are cashing in on higher-beta names, while BTC and ETH supplies remain tight.
Challenges on the Horizon: Token Unlocks and Liquidity Tests
September is marked by a wave of token unlocks totaling $4.5 billion, a dynamic that could test the market’s liquidity and absorption capacity. Gracie Lin, CEO of OKX Singapore, highlighted in a note to CoinDesk that while these unlocks could pressure the market, they also represent a test for crypto’s liquidity buffers.
Despite these potential challenges, Lin remains optimistic about the long-term potential of the crypto market. She points out that stablecoins are nearing a $300 billion supply, and major infrastructure developments, such as Nasdaq’s move towards tokenized securities, are integrating crypto into the global financial system.
The Broader Market Context
Beyond the crypto sphere, the broader financial markets are also reacting to the impending Fed decision. Gold prices have soared to record highs, driven by expectations of U.S. interest rate cuts, a weakening dollar, and geopolitical uncertainties. Meanwhile, Asia-Pacific stocks, including Japan’s Nikkei 225, fell slightly as investors kept a close eye on Wall Street’s movements and awaited the Fed’s decision.
The S&P 500, after reaching a record high, slipped by 0.13% as investors booked profits ahead of the Fed’s rate announcement. This cautious sentiment underscores the delicate balance investors are trying to maintain as they navigate the current economic landscape.
A Crossroads for Crypto
As we stand at this financial crossroads, the crypto market is poised for significant developments. The Fed’s easing cycle could either provide the momentum for a new leg higher for BTC and ETH or introduce volatility that tests the market’s resilience. Traders and investors are watching closely, weighing the potential gains against the risks.
In the end, the message is clear: the Fed pivot is nearly priced in, but the real test lies in whether the crypto market’s liquidity buffers, stablecoin inflows, and ability to absorb token unlocks can channel capital effectively into the next growth phase. As the day unfolds, one thing is certain—crypto is no longer an outlier but a vital part of the evolving global financial system.
Steve Gregory is a lawyer in the United States who specializes in licensing for cryptocurrency companies and products. Steve began his career as an attorney in 2015 but made the switch to working in cryptocurrency full time shortly after joining the original team at Gemini Trust Company, an early cryptocurrency exchange based in New York City. Steve then joined CEX.io and was able to launch their regulated US-based cryptocurrency. Steve then went on to become the CEO at currency.com when he ran for four years and was able to lead currency.com to being fully acquired in 2025.
