Cutting interest rates in the USA evokes great emotions among investors, which is why many people are wondering how this move could affect the cryptocurrency market. Benjamin Cowen in his latest material analyzes possible scenarios after the FOMC decision and points to a very cautious approach from the Fed. He notes that individual altcoins may rise, but broad euphoria is unlikely to return quickly.
Before the market reacts to tomorrow's decision, it is worth understanding what may happen in the coming months.
Rate cuts as a turning point for the market
Benjamin Cowen begins his analysis by discussing market expectations, which already price in about a 90% chance of a 25 bp cut to 3.75%. He notes that although Jerome Powell previously emphasized a lack of 'foregone conclusion', the Fed is unlikely to want to negatively surprise. The market is therefore counting on a downward move that could provide a short-term bounce.
It is worth noting that at the same time, the Bank of Japan is likely to raise rates, as indicated by about a 75% probability. Cowen emphasizes that such a combination has historically been a catalyst for strong declines, as in August 2024. Investors are therefore looking more broadly than just at the USA, as global markets are now more interconnected.
Cowen states outright:
"I expect a rate cut on December 10 and a short bounce, but then rather a slow, frustrating drop in 2026 in the style of 2019 – without euphoria, without altseason, with a cautious Fed and lower highs along the way."
From this perspective, cutting rates could be an impulse, but not the beginning of a new euphoria.
Why the bounce may be short and weak
Cowen explains that the current cycle has many similarities to 2019, when the market reacted to the Fed's first moves, but without breaking key levels. He believes that this time we will also see a so-called relief rally, meaning a short bounce, but the market will stop at a lower peak. This lower high effect has appeared multiple times in mature cycles.
Cowen explains that the previous peak was 'non-euphoric', meaning it was formed in apathy rather than in a buying frenzy. Such a peak usually does not lead to a sudden bear market but rather to a long and frustrating sideways-down trend. He defines this model as time-based capitulation, because it is time – not panic – that exhausts investors.
In this context, cutting rates may only be a short stop in a larger trend. Cowen believes that the Fed will not aggressively cut rates because Powell does not want to risk a return of inflation. Faster easing may therefore only come after a change in the Fed chair in May 2026.
Is altseason possible after rate cuts?
Cowen emphasizes that altseason requires three elements: rising social interest, loose monetary policy, and a strong upward trend in the major assets. None of these conditions are met today. Social interest is declining, the Fed is maintaining a 'sufficiently restrictive' policy, and Bitcoin is showing clear weaknesses.
The expert does not expect a broad altcoin rally. However, he points out that even in difficult markets, there have been instances of individual projects creating new ATHs. An example could be the situation from previous cycles, where selective increases occurred despite overall weakness. Therefore, Cowen states outright that some altcoins may rise even with lower Bitcoin peaks.
It's worth remembering that cutting rates can trigger emotions, but it doesn't have to ensure an altseason.
Key takeaways for beginner investors
At this point, it is good to organize key points that can help approach the market:
Cutting rates may provide a short bounce, but does not guarantee a lasting upward trend.
The Fed will be cautious, so it's not worth counting on quick easing.
Individual altcoins may be stronger, but a broad altseason is unlikely.
If you're wondering whether this is a good time for large purchases, Cowen suggests carefully assessing the market and not assuming a quick return of euphoria.
Summary
Many investors wonder whether cutting rates will trigger a strong impulse for Bitcoin and altcoins. Cowen claims that an impulse is possible but will likely be short-lived. He emphasizes that a cautious Fed and declining community interest will limit the potential for significant increases.
There is also the question of whether altseason will return after the FOMC decision. Cowen explains that the conditions are currently too restrictive and only future easing could trigger this trend. He notes that even with a lower peak, individual altcoins have a chance to surprise.
Others are asking whether the current market resembles earlier cycles. Cowen believes it most resembles 2019, when cutting rates brought a bounce, but the market continued to lose strength slowly.
To read the latest cryptocurrency market analysis from BeInCrypto, click here.
