US Economy Shows Signs of Slowdown: Markets Pull Forward Fed Rate Cut Expectations - What This Means for Crypto

Yesterday we got important data related to the economy that confirms a slowdown in US economy. GDP (Gross Domestic Product) fell from 3.1% to 2.3% following the expected result while initial jobless claims increased from 220K to 242K surpassing the expected 222K.

These indicators tell use that US economy growth is weakening that has made the markets pull forward the expectations for Federal Reserve rate cuts.

Economic calendar 27/02/2025 GMT+1

These indicators tell us that US economic growth has weaken leading to markets to pull forward their expectations for Federal Reserve rate cuts. Market expected a first rate cut in December but now markets are anticipating it by June with other potential cut in September but this also depends on today PCE inflation report.

Economic calendar 28/02/2025 GMT+1

If PCE inflation comes lowers than expected it could reinforce the case for rate cuts and could trigger a rally in risk assets like crypto. As you know, lower rates usually reduce the appeal to hold cash and fixed income assets increasing liquidity and capital inflows into more risky markets like crypto.

However, if inflation remains high the Fed may delay cuts leading to a short term pressure on the markets. Usually crypto has benefited from a dovish Fed but honestly, who knows right now. Market feels highly manipulated right now to increase the fear of minor investors and new ones so they panic sell. My bet is that they are trying to create a better entry point for all the US government friends and other states so they can buy cheaper but this is just a conspiracy theory.

Anyway, don't forget to always remove the noise of the price movements if you are a holder and not a trader, check metrics, check adoption, check macroeconomic data and enjoy the ride. Crypto is not going to zero.

How do you think today's data is going to be?