Split Over US Fed Rate Cut Comes Out Again, Crypto Market Feels the Pinch

• Uncertainty continues over the US Fed rate cut decision and timeline.
• Collective market cap is down by 6.25%.
• Upcoming US January 2026 inflation and employment data are possibly additional factors influencing the crypto market.

Two different positions over the US Fed rate cut have again come under the spotlight. There is a view that supports a delayed rate cut, and there is a view that wants to accelerate the process. Feeling the pinch of this uncertainty stemming from confusion is the crypto market. It has shed significant weight from the market cap.

Also possibly contributing to the downtrend is the anticipation around US January inflation and employment data, scheduled to be published soon.

US Fed Rate Cut: Happening or Not?

The US Fed decided not to cut rates after the January meeting. However, the selection of Kevin Warsh for the next Chair has brought new dynamics. His plan reportedly aligns with Donald Trump’s wish of lowering lending rates.

An extension of this scenario played out recently when Lisa Cook, US Federal Reserve Governor, hinted at supporting the reduction of interest rate after taking some time. As reported by Reuters, Lisa said that this is the right time to sit back and wait to see what happens.

On the contrary, Trump expressed confidence over rate cuts happening. The US President didn’t mention the timeline, but, during his media interaction & as reported by Reuters, he said that there was not much doubt in his mind that rates will be lowered. Trump also clarified that Warsh understands his inclination to lower the rate – but wants to do it anyway.

Crypto Market Dips Deeper

Both the top cryptocurrencies, BTC and ETH, have lost over 7% of their respective values in the last 24 hours. Bitcoin tokens are hovering between $70k and $71k at the time of writing this article. Ether tokens are closing the gap towards a slip to the $2k mark. The collective market cap of tokens across the globe is down by 6.25% to $2.41 trillion, with a shift in the FGI to 11 points.

Fear is largely looming over BTC. Kalshi Traders earlier laid out a forecasted value of $64,000 in 2026. They have revised the estimate to $60,000 with an 80% chance for the year. This revised estimate was shared after the flagship crypto dropped its weight below $71k. Uncertainty over rate cuts remains in the crypto sphere, leaving investors confused about fund allocation to the risky and volatile sector.

Additional Possible Factors

Apart from two sides battling out for a call to lower, or not lower, the Fed rate, upcoming inflation and employment US data for January 2026 could possibly be affecting price movements. The U.S. Bureau of Labor Statistics is scheduled to publish employment data next Wednesday.

The inflation report could see the light on Friday next week. The rate as on December 31, 2025, was 2.71%, up from 2.68% for November 2025. Something positive from both reports may give an upward trajectory to the crypto market.

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