The post FED Meeting Today Could Spark Bull Run If Dot Plot Signals More Cuts appeared first on Coinpedia Fintech News

The Federal Reserve is expected to announce the start of its interest rate cut cycle tomorrow, but analysts warn the real market driver will not be the cut itself. Instead, attention is on the Dot Plot the Fed’s projection of how many cuts policymakers expect in 2025, 2026, and 2027.

“The market will not react to today’s rate cut; it will react to the Dot Plot,” analyst Catalina Castro explained.

Why the Dot Plot Matters for Bitcoin

In June, most Fed members projected two cuts for this year, one for 2026, and one for 2027. If tomorrow’s projections reveal more cuts ahead, it could spark a bullish reaction in both stocks and cryptocurrencies.

“Markets don’t react to the present; they react to expectations. The 0.25% cut is already priced in,” Castro noted. “If the Fed signals deeper cuts, it’s giving the green light to liquidity.”

Historical Patterns Favor Bulls

History supports the bullish case. Since 1980, there have been 20 rate cuts when the S&P 500 was near record highs. In every instance, the index posted gains over the next year, with an average return of +13.9%. In 1996, in a similar setup, the S&P surged +22%.

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JP Morgan added that when the Fed cuts rates while the S&P 500 trades within 1% of an all-time high, the average one-year gain is +15%. However, short-term volatility often follows: “Stocks end lower in the first month 50% of the time,” Castro cautioned, suggesting any dip could be a buying opportunity.

Liquidity Triggers: Stablecoins, Money Markets, and QT

Beyond the rate decision, several liquidity drivers could fuel risk assets:

  • Stablecoins: Over $300 billion is currently locked in DeFi protocols, earning 4–6% yields. With rates falling, that capital could rotate into cryptocurrencies.
  • Money Market Funds: Roughly $7.5 trillion sits in money market funds. Lower yields here could push investors toward stocks and digital assets.
  • Quantitative Tightening (QT): The Fed’s asset-selling program is likely to end once cuts begin. Historically, every altcoin season has coincided with the end of QT or the start of QE.

Adding fuel to the mix, the AI revolution remains a powerful macro theme. 

Castro emphasized, “The biggest revolution since the ‘90s, combined with an expansive Fed, could be pure dynamite for risk assets.”

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FAQs

What is the Fed Dot Plot and why does it matter?

The Dot Plot is the Fed’s projection of future interest rate changes. It matters more than the actual cut because markets react to future liquidity expectations, not priced-in moves.

How do Fed rate cuts affect Bitcoin?

Rate cuts boost liquidity and weaken the dollar, making Bitcoin more attractive. Historical data shows risk assets like crypto often rally post-cut, especially with bullish Dot Plot signals.

What is the historical performance of stocks after rate cuts?

Since 1980, when the S&P 500 hit records at the time of a cut, it gained an average of +13.9% over the next year, though short-term volatility is common.

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