The crypto market rises significantly due to expectations of interest rate cuts: Bitcoin returns to $115,000, while Ethereum and Solana perform strongly.

Last week, the Crypto Assets market experienced a significant pump, primarily driven by better-than-expected inflation data from the US, which boosted market hopes for a Fed rate cut. Bitcoin has once again risen above $115,000, while Ethereum and Solana achieved substantial rises thanks to their respective strong momentum. This week, the market focus will shift to the Fed's FOMC meeting, particularly Chairman Powell's speech.

Inflation data boosts interest rate cut hopes, market rebounds broadly

Last week, the Crypto Assets market finally experienced a strong pump. As of Sunday (4 PM UTC), Bitcoin's price rose by 4.78%, Ethereum rose by 7.72%, while Solana's rise was as high as 22.65%.

The main driving force behind this pump is the market's enhanced expectations for a rate cut by the Fed. This expectation was strengthened last Wednesday when the Producer Price Index (PPI) for August was released, showing a month-on-month decrease of 0.1%, far below the market's anticipated increase of 0.3%, marking the first decline in 4 months. This data is interpreted as a positive signal that inflationary pressures are easing.

Subsequently, the Consumer Price Index (CPI) for August released on Thursday, although still on an upward trend, met market expectations, which further eased concerns about accelerating inflation. As a result, Bitcoin price rebounded to $115,000 for the first time in two weeks.

Ethereum and Solana Perform Outstandingly

After a lackluster performance earlier last week, the price of Ethereum started to gain momentum following the release of the CPI report on Thursday, rising over 8% within two days. Meanwhile, the Ethereum spot ETF market also reversed the trend of capital outflow that had persisted for two consecutive weeks, attracting over $400 million in inflows just on Friday.

Solana's performance is particularly eye-catching. After months of failing to break through the key level of 210 dollars, Solana has risen for 8 consecutive days, with its strong momentum confirmed in both the futures and spot markets. Even before the release of the CPI data, its futures open interest had already exceeded 8.1 billion dollars. This round of increase has also reactivated the Solana ecosystem, with its total locked value (TVL) in DeFi soaring to a historical high of over 13 billion dollars.

This Week's Outlook: Focus on Powell's Speech

After a strong rise over the weekend, the price of Bitcoin has slightly retreated to around $115,000, entering a consolidation phase. Other mainstream coins such as Ethereum, Solana, and AVAX are also experiencing slight pullbacks.

The most critical event this week will be the FOMC meeting results announced by the Fed on Wednesday (UTC time 6 PM). The market generally expects the Fed to cut rates by 0.25 percentage points, but the real highlight will be Fed Chairman Powell's speech at the press conference. If his remarks suggest that further rate cuts may be possible in the future, Bitcoin may see further rise. Additionally, the U.S. retail sales data released on Tuesday is also worth paying attention to. If the data is too weak, it may trigger concerns about an economic slowdown, which could negatively impact risk assets.

Conclusion

Last week's rebound in the Crypto Assets market was driven by macroeconomic data, which once again highlights the significant impact of macro factors on digital asset prices. Despite the recent strong upward momentum, the market remains in a wait-and-see mode, and its next major movement will depend on the Fed's policy stance. Investors will closely monitor this week's FOMC meeting results and Powell's speech for guidance on the future direction of the market.