Expectations surrounding possible rate cuts by the Federal Reserve in September are nearing peak levels, especially among crypto investors. Historically, Fed rate cuts have often meant the start of a bull run since it signals to investors to take more positions in risk assets such as Bitcoin and crypto. Thus, with only two weeks left to the next FOMC meeting, votes are already coming in for what the Fed will do and how the crypto market will react.

Probability Climbs Above 97%

The CME Watch Tool from the CME Group website is now showing the highest probability so far for a Fed rate cut in September. The percentage had fluctuated over the month of August, rising above 92% and then falling back to 75% again as different developments popped up. However, as the market entered the month of September, sentiment has skewed completely toward the positive, and the probabilities have risen drastically.

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Bitcoinist had reported that the probability had fallen to 75% toward the end of August. But now the figure is back again, reaching the highest level so far, ahead of the FOMC announcement. The Fed Watch Tool now reads a 97.6% chance that the Fed will cut rates this September and trigger another bull run.

This figure means that there is now only a 2.4% probability that the Fed would choose to keep rates at the same level as they did the last time. In contrast, there is still a 0% chance that there will be a rate hike this September. In fact, there have not been talks of a Fed rate hike for months now, suggesting that all focus remains on the rate cuts.

How The Crypto Market Could React

Naturally, a Fed rate cut is bullish for both the stock and crypto markets as it allows investors to take on more risks. This triggers a flow of liquidity into the market, driving up prices rapidly, while also increasing the volatility of the market at the same time.

The expectation is that the crypto market could rally off the news, especially as US President Donald Trump has been in support of rate cuts for months now. However, there is also the need to be cautious due to high expectations often leading to dashed hopes.

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In a report, the on-chain data analytics platform Santiment revealed that social conversations with the words “Fed”, “rate”, and “cut” had risen to the highest level in almost one year. This suggests a lot of bullishness already surrounding the FOMC meeting. But periods like these have often marked the top, leading to a possible “buy the rumor, sell the news” event.

If the latter is the case, then it would mean that prices could rise leading up to the FOMC meeting and then crash if the announcement is different from expectations. Thus, it would be wise to be cautious around this period, especially with the expectation of high volatility.

Featured image from Dall.E, chart from Tradingview.com

The following article is a guest post and opinion of Maksym Sakharov, Co-founder and CEO of WeFi.

Last month, Japan’s Financial Services Agency proposed a wholesale reclassification of cryptocurrencies that would introduce a flat 20% tax on digital asset income and help introduce crypto exchange-traded funds.

For a long time, the country’s progressive tax system has imposed levies on crypto gains at rates of up to 55%, a factor many feel makes investing in crypto quite unattractive.

Institutionalized Inertia

However, this is not the only obstacle in the path of a potential Bitcoin ETF approval in Japan; it’s not even the most pressing. Late last year, Prime Minister Shigeru Ishiba seemingly dismissed the idea of crypto ETFs, questioning whether the government should promote digital assets like it does traditional investments.

His ruling coalition lost its majority in the upper house following a bruising contest that saw them fall three seats shy of the 50 needed to maintain their advantage. Yet, even as political control hangs in the balance—and Ishiba vows to stay regardless of the election outcome—one thing has remained consistent: Japan’s deep-rooted caution.

Ishiba’s noncommittal stance on ETF approvals is merely a symptom of a deeper malaise. The country’s regulatory reflex isn’t about consumer safety alone—it’s about an entrenched culture of compliance that resists risk at all costs. This mindset, not the much-maligned 55% crypto tax, is what’s truly stifling innovation.

The irony is that Japan was once ahead of neighbors like South Korea and Hong Kong. It recognized crypto as a means of payment back in 2017 and built some of the world’s earliest regulatory infrastructure. Furthermore, in the second quarter of 2024, Metaplanet kick-started a wave of Bitcoin buying by Japanese listed companies, amassing a treasury worth almost $2 billion in BTC at last count. And that’s not all. Progress has also been made in the development of stablecoins and crypto payments infrastructure, with Sumitomo Mitsui signing an MoU with Ava Labs and Fireblocks in preparation to issue fiat-pegged cryptocurrencies.

Yet, beneath these seeming success stories lies a bureaucratic labyrinth killing businesses. Under the current framework, small startups with dreams of offering virtual asset services have found it hard to meet the stringent requirements that include extensive documentation, a local bank account, a Japan-based compliance team, and at least 10 million yen in capital, among others.

Some may argue that the rules are there to protect users, and that’s valid. But couldn’t there be a happy balance between consumer protection and leeway for innovation? It almost feels like the FSA is isolating regulators from builders, with pencil pushers designing rules without stress-testing them against real-world tech constraints.

If taxes were the real barrier for Web3 innovation, the FSA’s proposed reforms would ignite a boom.

Reform Roadmap

To pivot from compliance to competitiveness, Japan needs to rewire some of its long-held approaches. For starters, the government must sunset the pre-approval model and adopt a quicker system that lets exchanges release tokens with post-launch audits. Here, tokens just need to meet baseline disclosure and security attestation requirements to be listed. Full regulatory and technical audits can then be conducted within 30 days of the launch. This way, investor protections are still preserved through enforceable audit sanctions and delisting authority, while at the same time dramatically reducing listing lead times.

The country’s regulators also have to launch dynamic sandboxes that could use zero-knowledge proofs for privacy-safe verification. There’s also a need for state capital injection. Japan could create a $500 million FSA-matched fund directly backing Web3 startups that meet security benchmarks, effectively giving it some skin in the game.

Finally, to foster cooperation and shake off its bureaucratic isolation, the financial regulator could seat tech founders on its advisory boards. This would give it a firsthand look at industry pain points, allowing it to shape policies with the end user in mind rather than to be defensive, status quo-preserving tenets.

These are not radical demands. They’re already standard in the jurisdictions that are now leading global crypto adoption.

Builders are watching. With populist parties like Sanseito gaining traction on “Japan First” rhetoric, the political winds are shifting. If Ishiba’s coalition falls, a new administration could usher in a more innovation-friendly era. But only if Japan’s regulators pivot away from their risk-averse DNA. Without that shift, tax reform will be cosmetic, ETFs will remain in limbo, and Japan’s early advantage in crypto will fade into history.

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JPMorgan Chase chief executive Jamie Dimon thinks the U.S. Federal Reserve could actually raise rates, contrary to popular belief.

Despite consensus expectations of a rate cut in the coming months, Dimon said in a speech in Ireland on Thursday that he thinks the market is underestimating the potential impact of inflation on the Fed’s policymaking, Reuters reports.

“I think the possibility of those higher rates (is) higher than anybody else…

The market is pricing a 20% chance. I would price in a 40-50% chance. I would put that as a cause for concern.”

Dimon says the US government’s tariffs, immigration policies and budget deficit could all have inflationary impacts.

Other voices in the financial sector have predicted the opposite for Fed policy. Goldman Sachs Research economists recently estimated there’s more than a 50% chance of the Fed cutting rates at the Federal Open Market Committee (FOMC) meeting in September, three months earlier than their previous prediction.

The Goldman economists predict 25-basis-point cuts in September, October, and December, and March and June of 2026.

The CME FedWatch Tool estimates there’s a 93.3% chance the Fed will maintain the target range for the federal funds rate at 4.25-4.5% at the FOMC meeting in July. The tool, which generates probabilities using the 30-day Fed Funds futures prices, estimates there’s a 59.7% chance the Fed will cut the rate by 25 basis points at the FOMC meeting in September.

FedWatch estimates a 0% chance of a rate hike this month or in September.

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US President Donald Trump has more insults for Federal Reserve Chair Jerome Powell.

At a bill signing ceremony on Thursday, Trump claimed the government would save $600 billion a year in short-term debt payments if Powell lowered the federal funds rate by 2 percentage points.

In May, the Federal Open Market Committee (FOMC) announced that it planned to maintain the target range for the federal funds rate at 4.25-4.5%, arguing that it was the most suitable level to achieve both maximum employment and controlled inflation. The Fed has held interest rates steady since December, when it cut the rate by 0.25%.

Trump says he’s not planning on firing Powell, but he slammed the Fed chair for not adjusting course.

“We’re going to spend $600 billion a year – $600 billion – because of one numbskull that sits there [and says] ‘I don’t see enough reason to cut the rates now.’ And the problem he’s got, and I explained to him… cut your rates now, there’s no inflation. We got it down, we got prices down.” 

Inflation rose by 2.4% in May, according to the Bureau of Labor Statistics. That was slightly less than the 2.5% increase predicted by economists, CBS reports.

Powell met with Trump last month following a barrage of insults from the president. The Fed, however, noted in a statement following the meeting that Powell did not discuss interest rate expectations with the president.

“At the President’s invitation, Chair Powell met with the President today at the White House to discuss economic developments, including for growth, employment, and inflation.

Chair Powell did not discuss his expectations for monetary policy, except to stress that the path of policy will depend entirely on incoming economic information and what that means for the outlook.

Finally, Chair Powell said that he and his colleagues on the Federal Open Market Committee (FOMC) will set monetary policy, as required by law, to support maximum employment and stable prices and will make those decisions based solely on careful, objective, and non-political analysis.”

Trump has repeatedly criticized Powell for not slashing interest rates, saying earlier in May that communicating with the Fed chair was “like talking to a wall.”

“The Bank of England cut. China cut. Everybody’s cutting but him. I don’t know, we’ll see what happens. It’s a shame. I call him ‘Too Late.’ Too Late Powell, that’s his nickname. And it’s a shame, it’s ridiculous… he’s always too late. But in this case, it’s not going to matter that much because our country is so strong, we’re so powerful in terms of economic strength and what we’ve done.” 

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The broader market indexes soared on Monday, May 12, in response to news that the U.S. and China would pause their reciprocal tariffs on most goods for 90 days — a move that built on the momentum from the trade deal framework that the U.S. and U.K. revealed at the end of last week.

As of Monday’s close, the S&P 500 (^GSPC 0.10%) was down just 0.6% year to date  — an astonishing rebound considering the index was down by more than 15% on the year at the nadir of its sell-off in early April.

While it’s great to see portfolio balances recover, those gains will matter little if they are fleeting, and investors are likely wondering if this bounce is the real deal or a head fake.

Either way, it’s important to focus on quality companies during volatile periods. But here’s why I think the worst of the 2025 stock market sell-off may be over, and what I’d recommend you do if the market keeps rallying.

Image source: Getty Images.

An end in sight

There’s no perfect science for knowing when a sell-off is about to start nor for gauging when one is over. But there are some simple indicators you can use to gauge market sentiment.

The simplest is the relationship between stock market sectors. When investors are optimistic about the outlook for the economy and corporate profits, growth-focused and cyclical sectors like tech, consumer discretionary, communications, financials, and industrials tend to do well. But when investors are fearful, then defensive and “safe” sectors such as utilities, consumer staples, and healthcare usually outperform the benchmarks.

Similarly, investors often turn to hard assets like gold during times of uncertainty. At one point in late April, gold prices were up by over 30% year to date while the S&P 500 was down more than 12%.

Another good indicator to watch is the CBOE Volatility Index, commonly known as the VIX. It measures the implied volatility of short-term options on the S&P 500. If investors are willing to pay more for a call option because they think the market will go up a lot in the short term, or a put option to protect against downside risk, then that will lead to higher volatility.

The VIX was at its lowest point of the year when the S&P 500 was near its all-time high in late February. Then, shortly after President Trump unveiled his global tariffs on April 2 (“Liberation Day”), the VIX spiked in lockstep with a massive sell-off in the S&P 500.

Data by YCharts.

In the last few weeks, the VIX has been falling and the S&P 500 has been climbing, a combination that could signal that the worst of the sell-off is over.

Great companies can sell off for bad reasons

The last month and a half or so have been a great lesson on the pitfalls of getting caught up in stock market volatility and letting emotions drive your investment decisions. It also shows the degree to which the market despises uncertainty.

The steep tariffs that Trump imposed led to a host of countries imposing their own higher tariffs on U.S. exports. The escalating tensions put the U.S. on the brink of an all-out trade war. Corporate leaders didn’t shy away from outlining the effects these tariffs would have on their businesses.

For example, Nvidia said it would be taking a $5.5 billion charge in its fiscal 2026 first quarter. Shares of Apple and Nike got crushed due to their exposure to China, both as a manufacturing hub and as a major market for sales.

However, strong results from top tech companies in the recent earnings season were a reminder that much of the broad market sell-off was based on fears of an economic downturn that had yet to materialize.

Microsoft reported phenomenal results and reaffirmed its upbeat revenue and operating margin guidance.

Meta Platforms ramped up its data center and artificial intelligence investments, and management forecast higher capital expenditures this year.

Alphabet reported steadily rising revenue and high margins. It also raised its dividend.

Outside of big tech, several companies saw their stock prices get crushed for the wrong reasons. For example, American Express reported excellent results and reaffirmed its full-year guidance. Its long-term investment thesis looks stronger than ever with the company expanding its network while displaying impeccable risk management. Yet the stock got clobbered, and its price-to-earnings ratio was compressed to bargain-bin levels.

Microsoft, Meta, Alphabet, and American Express are just some of the many examples of companies that were doing just fine even when trade war tensions were hot, yet their stock prices fell anyway.

Quality wins in the long run

Market sell-offs can be swift and brutal. When your screen flashes red with no end in sight, it’s easy to get caught up in fear.

However, companies with strong balance sheets don’t need to overhaul their capital spending plans just because new policies in Washington appear liable to throw a wrench in a few quarters of results. Investors can take a similar approach by not overhauling their investment portfolios based on factors that don’t pertain to the underlying investment theses of their holdings.

Resisting the urge to take action can be difficult, but I’ve found that one of the best ways to handle volatility is to invest in a way that limits pressure.

Pressure can come in different forms. But some of the simplest ways to mitigate pressure are to invest with a long-term mindset with money that you won’t need anytime soon. Also, stick to holding shares of companies that you understand and that have strong fundamentals. Lastly, accept that rough conditions can get worse before they get better.

The same approach applies when the market is going up. You can eliminate pressure on yourself by recognizing that you don’t have to time the very bottom to buy, nor wait to buy stocks until you can get them at incredible prices. Even if you’re feeling like you missed out on the bargain-bin prices from recent weeks, that’s OK. The real wins come from investing in top companies and holding them over the long term, not from trying to capitalize perfectly on short-term periods of market volatility.