Following the shock caused by the Producer Price Index (PPI) data, the cryptocurrency market experienced a rapid plunge. Despite diminished expectations for a rate cut, five Fed members still support the reduction amidst a significant cooling in employment, making it difficult to draw clear conclusions. At the time of writing, Fed member Musalem is making his first statements following the PPI data.
Fed Rate Announcements
Bitcoin (BTC) 
$80,187 has returned to $119,000, yet over half a billion dollars in long positions have been liquidated. Ethereum (ETH) 
$2,422 hovers around the $4,700 mark, with future Fed member announcements potentially playing a decisive role. Should there be contrary statements from the five members who support rate cuts, the situation could become more complicated. Yesterday, two different members expressed their cautious stance toward reductions. Now, Musalem echoes similar, if not more concerning, sentiments.
Inflation appears to be hovering around 3%. Tariffs impact inflation, and their effect could diminish within 6 to 9 months but might persist longer. The permanence of their impact is a reasonable possibility.
The labor market is at full employment, albeit with downward risks. There are signs of weakening, but the labor market remains robust. While labor demand has decreased, so has supply. It is reasonable to expect the equilibrium point for labor costs to be below 50,000. I’ve slightly revised my view on labor market risks upwards and inflation risks downwards.
As more data comes in, I will continue to revise my perspective; it’s too early to determine the right decision for September. I haven’t received any reports from businesses on the verge of layoffs.
Selected officials have the right to express views on monetary policy, yet the Fed’s role is to heed the voices of the region’s public and businesses. If the Fed aggressively cuts rates, considering the labor market more, it could raise inflation expectations and cause an adverse effect. So far, the effect of tariffs on essential goods and services has been limited. The potential for tariffs’ influence on inflation to be more lasting is reasonable. A half-point cut is unsupported by the economic condition or data.”
Bitcoin stands at $119,000, and although rate cut expectations for the meeting 34 days away have slightly diminished, they remain above 90%. December expectations have weakened.
