Recently, with the release of the July Consumer Price Index ( CPI ) data, the market's expectations for the Federal Reserve possibly lowering interest rates in September have significantly risen, with the probability exceeding 80%. This expectation led to a decrease of 6 basis points in the two-year U.S. Treasury yield, and the U.S. dollar index also showed noticeable fluctuations. These changes in economic indicators have drawn significant attention from participants in the encryption currency market.

Historical data shows that there is a certain correlation between the Federal Reserve's monetary policy adjustments and the trends in the encryption market. For example, after the Federal Reserve began its rate-cutting cycle in 2019, the price of Bitcoin rose from $3,000 to $14,000, an increase of as much as 400%. Currently, the market expects that the Federal Reserve may cut rates by 25 basis points, and may even cut rates consecutively. In this economic environment, institutional investors and large funds may view cryptocurrencies such as Bitcoin and Ethereum as investment choices with both hedging and speculative properties, thereby driving up their prices.

A weaker dollar typically leads global funds to seek new investment directions. In the field of encryption, projects in emerging areas such as artificial intelligence (AI), meme coins (MEME), and real asset tokenization (RWA) may attract the attention of investors, reminding one of the prosperous scene of decentralized finance (DeFi) in 2020.

On-chain data shows that approximately 30,000 bitcoins have been withdrawn from exchanges in the past 24 hours, indicating that large holders are accumulating chips. According to reports, a well-known institution purchased 2,000 bitcoins when the price was around $118,000, with a short-term target price potentially reaching $70,000.

For short-term investors, the market may experience a pullback after the release of CPI data, which could provide a buying opportunity. Long-term investors who are confident that the interest rate cut cycle has begun may consider holding onto encryption assets continuously, as the possibility of Bitcoin reaching $150,000 and Ethereum reaching $10,000 might just be a matter of time.

However, investors also need to pay attention to the fact that non-farm employment data and personal consumption expenditure ( PCE ) data will be released in August, which may trigger market fluctuations. But from a larger trend perspective, if the Federal Reserve adopts a loose monetary policy, the cryptocurrency market may welcome a rise. Some analyses suggest that this wave of market conditions could be a once-in-four-years wealth redistribution opportunity, which is worth close attention from investors.

In any case, investors should proceed with caution, fully understand market risks, and make investment decisions based on their own risk tolerance.