Bitcoin and Ethereum could be on the verge of a dramatic rally if the Federal Reserve moves ahead with its long-anticipated rate cut this week, according to Tom Lee, chairman of Ethereum treasury BitMine.
Speaking to CNBC, Lee said that digital assets stand out among sectors most sensitive to liquidity when central banks ease policy. He pointed to past episodes in Sept. 1998 and Sept. 2024, when the Fed shifted course, as his playbook.
He predicted a “monster move” in Bitcoin and Ethereum specifically in the next three months.
Policy Makers Poised to Lower Rates After Months on Hold
The Fed begins a two-day policy meeting Tuesday, with a decision scheduled for 2 p.m. ET on Wednesday, Sept. 17. Markets expect a 25 basis point cut that would lower the federal funds rate to 4.00% to 4.25%, the first reduction of the year after months of holding steady at 4.25% to 4.50%.
Expectations have been shaped by signs of a cooling US labor market, including slower job growth and an unemployment rate that climbed to 4.2% in July. Inflation, however, remains sticky at around 3%, pushed up by tariffs and other supply-side pressures.
Trump Calls for Bigger Rate Cut, Raising Pressure
Traders tracked by the CME FedWatch tool overwhelmingly anticipate a modest cut, though some see a slim chance of a deeper 50 basis point move. President Donald Trump has openly called for a larger reduction, adding political pressure to the Fed’s deliberations.
Ahead of the announcement, markets were in wait-and-see mode. Asian equities climbed to new highs, while the dollar struggled to gain traction. Investors have already priced in a policy shift, with tech shares and crypto assets leading recent gains.
Bitcoin last traded around $115,800, up 3.4% over the past week. Ethereum hovered near $4,528, gaining 5% in the same period. Both have been buoyed by optimism that cheaper liquidity will boost demand for risk assets.
Crypto Positioned at the Center of Easing-Driven Surge
Lee noted that besides tech and crypto, small caps and financial stocks also tend to benefit from rate cuts. However, he suggested Bitcoin and Ethereum could be the standout trades given their seasonal strength and sensitivity to monetary easing.
For crypto investors, the prospect of easier liquidity has once again raised hopes of outsized gains after a volatile summer.
A clear signal from the Fed on Wednesday could set the tone for global markets into year end, with Bitcoin and Ethereum positioned at the heart of the risk rally that Lee predicts.
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