What impact will the Fed’s rate cut have on the crypto market?

Risk assets fell sharply as the release of March inflation data was hotter than expected. When will the rate cut come, and what impact will it have on your crypto assets?

Investors have been encouraged in recent months by the prospect that inevitable rate cuts could ease future economic conditions and provide a boost to risk assets, but the Fed has long insisted it will keep rates high to fight inflation.

Today's data on rising inflation slightly above analysts' expectations appears to be causing investors to question those assumptions...

Market participants have now priced in the impact of the June rate cut, reducing the total number of expected rate cuts to two in 2024. The U.S. 10-year Treasury yield surged to a 2024 high as traders began to price in the fact that rate cuts could come later than expected.

Broader S&P 500 futures began moving lower immediately after the inflation data was released at 8:30 ET, causing the cash market to open 1% below yesterday's close.

As expected, crypto assets were also affected by the data release, with their volatility relative to stocks on full display as popular tokens experienced more dramatic declines and more pronounced recoveries.

There may be a slight delay in the expected rate cut, but even President Biden is confident that a rate cut will happen sometime in 2024.

While official government data sources continue to suggest inflation is too high, decentralized data service Truflation suggests that year-over-year growth remained below the Fed’s 2% target throughout April, lending credibility to the U.S. president’s assertion.

While the consensus is that rate cuts will be unequivocally bullish, given their minimal impact on past recessions, it remains to be seen whether this time will be different and whether they will actually be able to combat a recession, leading to their utilization…