Crypto Market Rally Faces FOMC Test: Will Momentum Continue This Week?

Welcome to the Asia Pacific Morning Brief—your essential digest of overnight crypto developments shaping regional markets and global sentiment. Monday’s edition is last week’s wrap-up and this week’s forecast, brought to you by Paul Kim. Grab a green tea and watch this space.

The crypto market finally saw significant momentum last week. As of Sunday at 4:00 PM UTC, Bitcoin’s price had jumped 4.78%. Altcoins soared even higher, with ETH climbing 7.72% and SOL skyrocketing by 22.65%.

Rising Rate Cut Hopes Drive Rally

The primary driver behind the recent surge in crypto and other risk assets is growing anticipation of US interest rate cuts. This expectation intensified after the August US non-farm payrolls (NFP) figures were released on September 5.

Following that report, markets priced in a 0.75 percentage point cut by the end of 2025 and 1.5 percentage points by September of the following year.

However, the Federal Reserve has hesitated to cut rates unilaterally, as consumer inflation remains stubbornly high, holding steady at around 3%—well above its target.

The market’s recent surge was primarily triggered by encouraging inflation data. On Wednesday, the August US Producer Price Index (PPI) was announced to have dropped by 0.1% month-over-month, falling short of the anticipated 0.3% increase. This marked the first decline in producer prices in four months.

A closer look at the data revealed a notable detail: corporate profit margins in wholesale and retail trade declined, particularly for machinery and vehicles. This suggests that companies absorb some of the cost increases rather than pass them entirely to consumers. Experts interpreted this as a sign that inflationary pressures are easing more than expected.

The US August Consumer Price Index (CPI) met market expectations on Thursday. While the uptrend in inflation held, the market was relieved that the pace was not accelerating. In response, Bitcoin’s price recovered to $115,000 for the first time in two weeks.

Ethereum and Solana Find Their Own Momentum

Ethereum’s price was initially lackluster early last week, but by Tuesday, capital flows into the spot ETF market turned positive, albeit slightly.

The real surge began after the CPI report on Thursday, with ETH climbing over 8% in just two days. On Friday alone, more than $400 million flowed into the spot ETF market, reversing a two-week-long slump.

Solana, which had struggled to break the $210 level for months, rallied for eight consecutive days. This strong momentum was evident in both the futures and spot markets.

The fact that futures open interest surpassed $8.1 billion even before the CPI data was released underscores the strength of this momentum. The rally has also revitalized the Solana ecosystem, with its total value locked (TVL) surpassing $13 billion amid rising DeFi usage.

The Week Ahead: Powell’s Words are Key

After a strong rally over the weekend, Bitcoin pulled back slightly to the $115,000 level, entering a period of consolidation. Other major coins like ETH, SOL, and AVAX are also experiencing minor price corrections.

This week’s most critical event will be the outcome of the Federal Open Market Committee (FOMC) meeting on Wednesday at 6:00 PM UTC. A 0.25 percentage point rate cut seems all but certain. The key, however, will be Fed Chair Powell’s press conference. If he signals a willingness for future rate cuts, Bitcoin could see further gains.

Other important data releases include US retail sales figures on Tuesday. If these numbers come in too low, concerns about an economic slowdown could grow, which would likely negatively impact risk assets. Here’s hoping investors have a profitable week.