The Fed’s Rate Cut Is Coming Part 2: What’s Happening Now?

Alright, if you’re still with me after yesterday’s breakdown, you already know the Fed isn’t just tinkering with interest rates—they’re pulling strings behind the scenes, manipulating the entire financial ecosystem, including crypto.

But let’s be honest, most publications won’t dig into that.

In Part 2, we’re going even deeper.

What’s really happening in the U.S. economy right now? How did the Fed deal with similar crises in the past?

And more importantly, how will this affect your crypto?

Stick around till the end because I’ll share a resource that’ll help you prepare for whatever the market throws at you. 

Let’s get into it.

The Current U.S. Economic Situation

Everyone’s hyped about the so-called “strong” U.S. economy, but let’s cut through the noise.

In August, nonfarm payrolls added just 142,000 jobs, well below the expected 164,000.

That’s a clear sign of slower job growth—the kind of trend that sends warning signals, yet no one seems to care.

Even worse, this number falls below the usual 200,000 monthly average.

What does that tell you?

Things are slowing down, whether they want to admit it or not.

Sure, the unemployment rate sits at 4.2%, within the “safe” range of 3% to 5%.

But slower job creation means this number could easily jump if the economy weakens any further.

The Fed is watching, but they’re trying to walk a tightrope—stimulate the economy without triggering inflation again.

And guess what?

It’s not as easy as they’d like you to believe.

Learn From History: How the Fed Dealt with Stagflation in the 1970s

Let’s talk history for a second.

In the 1970s, the U.S. wasn’t just dealing with inflation, it was facing stagflation—a brutal combo of high inflation, slow growth, and rising unemployment.

The Fed, led by Paul Volcker, didn’t play nice. They hiked interest rates aggressively in the early 1980s.

Yes, it caused a short-term recession, but it also got inflation under control and put the economy back on track for the long run.

So, what’s the takeaway here?

The Fed might look calm and calculated, but when things get messy, they’re willing to take drastic action.

As a crypto investor, you need to be paying attention.

Macroeconomic policies like these don’t just affect the stock market—they hit liquidity and market sentiment in crypto too.

And don’t think for a second that today’s challenges won’t have similar ripple effects.

The Risk of Recession and Its Impact on Crypto Investors

Let’s get real about what happens when a recession hits.

It’s not just a technical term—it’s the collapse of economic stability.

Unemployment spikes, businesses stop investing, and consumer spending takes a nosedive.

And what happens to your crypto portfolio? It’s not pretty.

Here’s what to expect if we enter a recession:

• Decreased Investment: Forget about institutional money flowing into crypto—investors run from risky assets, and crypto is the first to take a hit.

• Volatility: Crypto is already known for its wild swings. Add economic instability to the mix, and you’re looking at some of the most volatile trading you’ve ever seen.

• Liquidity Concerns: Liquidity dries up fast during recessions, which means selling your crypto at a decent price could become impossible without causing major price slippage.

• Opportunities in Downturns: But hey, there’s always a silver lining. If you’re a sharp, contrarian investor, you might see this as a buying opportunity. Pick up crypto at a discount, wait for the economy to recover, and cash in on the upswing.

Fed's Options: Risks of Cutting Rates Too Much or Too Little

Now, let’s talk about the Fed’s options. They’ve got two main moves on the table, and neither one is without risk.

1. Cut Rates by 25 Basis Points

This is the “safe” choice—a modest cut to help boost spending and investment.

But let’s be honest, it’s a band-aid. It might give the economy a little push, but it’s probably not enough to stave off a full-blown recession.

2. Cut Rates by 50 Basis Points

Now, this is the bold move. A 50 basis point cut could inject some serious liquidity into the economy and crypto markets.

But what’s the flip side?

It could send a signal that the Fed is panicking, and that could stir up market uncertainty.

Worse yet, it might reignite inflation, putting us back at square one.

The Fed’s Balancing Act

Fed Chairman Jerome Powell knows he’s stuck in a balancing act.

He said, “We do not seek or welcome further cooling in labor market conditions.” 

Translation: inflation might be cooling down, but job losses are creeping up.

The Fed’s caught between controlling inflation and avoiding mass unemployment.

It’s a tightrope walk, and one wrong step could tip the entire economy into a downturn.

Risks of Cutting Too Much

Cutting rates too aggressively (like a 50 basis point cut) could make borrowing dirt cheap.

Sounds good, right?

Wrong. If demand outpaces supply, inflation could skyrocket again.

The same problem the Fed’s been trying to dodge could come roaring back.

Risks of Cutting Too Little

On the other hand, if the Fed goes too soft (like a 25 basis point cut), it might not stimulate the economy enough.

We’re already seeing slower job growth, and a mild cut might not be the boost we need.

The risk here is clear—higher unemployment and a possible recession.

Conclusion: Opportunity vs. Risk Ahead of September 18

As we approach the September 18 Fed announcement, here’s what you need to keep in mind:

• Opportunity: A rate cut could flood the crypto market with liquidity, driving up demand and prices. Lower borrowing costs mean more money in the hands of investors looking for high-risk, high-reward opportunities like crypto.

• Risk: On the flip side, a recession could still be lurking. Economic instability could dry up liquidity, crank up volatility, and tank crypto prices when you least expect it.

Either way, stay sharp. The market’s about to move, and you need to be ready for whichever direction it takes.

If you’re like me, you’re probably wondering how to be ready for the next big crypto move—whether it skyrockets or crashes.

I found this Cryptocurrency Trading for Beginners course that’s helped over 54,000+ people get the basics down and learn how to trade smart, no matter what’s coming.

It’s simple, easy to follow, and really useful if you’re new to this.

If you want to be prepared and trade with confidence, I recommend checking it out now: Here’s the course link.

And if you found this article useful and want more insights that cut through the fluff and show you what’s really happening in the crypto world, subscribe to Crypto Profit 101.

We deliver real, actionable advice for beginner investors—so you can stay ahead of the curve.