Cryptocurrency markets are experiencing a significant rally driven by growing speculation that the Federal Reserve could implement an aggressive 50 basis point rate cut at its September 17 meeting. Prediction markets have dramatically shifted expectations, with Kalshi traders pricing a 16% chance and Polymarket showing a 15.3% probability of a 50bps cut - a remarkable change from zero probability just one week ago.
The CME Group's FedWatch tool indicates nearly a 10% chance for a new target rate of 3.75-4.00%, while markets previously only anticipated a standard 25 basis point reduction. This shift follows recent economic data showing Producer Price Index (PPI) figures at 2.6% against previous and expected 3.3%, along with Bureau of Labor Statistics revisions showing 911,000 fewer jobs created through March 2025 than initially reported.
Bitcoin has responded positively, trading above $113,750 with 2% gains, while the total cryptocurrency market cap reached $3.88 trillion, up 1.5% from the previous day's $3.82 trillion. Most notably, altseason indicators have surged to their highest levels since December, with the Blockchain Center and CoinGlass altcoin season index both showing a score of 76 out of 100.
The total altcoin market capitalization excluding Bitcoin and stablecoins stands at $1.63 trillion, approaching the 2021 all-time high and nearing the $1.64 trillion peak from November 2024. Top performers include Dogecoin (+5% to $0.25) and Avalanche (+11% to $29), with other strong showings from Hyperliquid, Stellar, Litecoin, and Toncoin all gaining more than 3% in the past 24 hours.
Tether's unusual $2 billion USDT mint, the first since December 2024, adds to the bullish sentiment, suggesting institutional preparation for increased market activity. The Federal Reserve's upcoming decision will likely determine whether current momentum continues, with a 50 basis point cut potentially accelerating the altcoin rally that market indicators suggest is already underway.