In 2025, the United States Federal Reserve is set to cut interest rates while the S&P 500 hits record highs. As per The Kobeissi Letter, a significant market shift may be imminent, potentially leading to the next crypto bull run.
Currently, historical stock valuations, steady GDP growth, persistent inflation, and emerging cracks in the labor market suggest that traditional market volatility might create opportunities in the upcoming altcoin season.
Fed Rate Cuts At Record Valuations
There are high expectations for the Fed to continue lowering rates in the upcoming decision on Wednesday, September 17, 2025, and into the year’s end. A recent thread on social media platform X suggests this could yield long-term bullish effects for the crypto market.
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Typically, the Federal Reserve cuts rates in response to economic downturns and declining equity markets; however, this situation is different. The Kobeissi Letter highlights that US stocks are currently at historical valuations, exceeding both the 1929 pre-Depression peak and the dot-com bubble. Moreover, the S&P 500’s price-to-book ratio reached a record 5.3x in late August.
Despite these unusual circumstances, it’s anticipated that policymakers will cut rates by at least 25 basis points this week due to labor market weaknesses. Historical data shows that when rate cuts occur with stocks near all-time highs, like in 2019 and 2024, the S&P 500 tends to show substantial gains in the following year. This unique situation could encourage investment in high-growth assets, including cryptocurrencies, in late 2025.
A Perfect Time For Altcoins
Rate cuts amid robust inflation increase liquidity, enticing investors to pursue riskier assets. Historically, this environment has led to significant rallies for Gold, Bitcoin, and other leading cryptocurrencies, as these assets see growth when fiat returns face scrutiny.
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According to The Kobeissi Letter, the moment is ripe. The Federal Reserve’s choice to cut rates at record high stock levels, amidst 3% GDP growth and inflation 110 bps over their long-term goal, might spark the next altcoin surge. Both Gold and Bitcoin have already reflected this liquidity shift, climbing 450% and 105%, respectively, since 2023.
Altcoins like Ethereum, XRP, and Chainlink—especially those involved in the burgeoning AI sector—are positioned favorably. While short-term volatility may arise, long-term holders stand to gain significantly from potential rate cuts.
However, should the Federal Reserve choose a more cautious approach to rate cuts than currently expected, it could lead to disappointment, resulting in declines across equities and cryptocurrencies in the short term.
Featured image from Getty Images, chart from Tradingview.com
