Bitcoin Optimism Amid Fed Rate Cuts & Stagflation Fears

Introduction

Amid growing signs of stagflation in the U.S. economy, market analysts remain optimistic about Bitcoin. Expectations that the Federal Reserve (Fed) will cut interest rates have boosted investor confidence, despite concerns over inflation and a weakening labor market.

Clear signs of stagflation

According to the latest data, U.S. consumer prices rose 0.4% in August, pushing annual inflation to 2.9%. At the same time, weekly jobless claims reached the highest level in four years. These are typical indicators showing the economy is facing stagflation — a situation of slow growth combined with rising inflation.

Fed expected to cut rates

Traders believe the Fed will cut rates by 25 basis points, bringing the benchmark rate down to 4% on September 17, with further cuts possible later this year. Although the economic data is not very encouraging, expectations that the Fed will prioritize supporting employment over controlling inflation continue to keep markets upbeat.

Positive market reactions

Despite macroeconomic concerns, major indexes surged strongly. The S&P 500 hit a new all-time high, while the U.S. Dollar Index (DXY) fell 0.5% to 97.50. Bitcoin briefly surpassed $116,000, marking an impressive technical breakout. Meanwhile, several altcoins such as Solana (SOL) and Dogecoin recorded even larger percentage gains over the past 24 hours.

Bitcoin’s long-term outlook

Shane Molidor from Forgd noted that Bitcoin is no longer simply seen as a risk asset. More and more investors view it as a hedge against fiat currency debasement and financial instability. Even if stagflation persists, the appeal of scarce and decentralized assets like Bitcoin becomes even stronger.

Solana and other prominent Altcoins

Solana (SOL) has become a focal point, with the SOL/BTC pair reaching its highest level in seven months. In addition, Ethena with its ENA token and synthetic stablecoin USDe, along with Hyperliquid’s HYPE token, are emerging as potential high-growth opportunities. Furthermore, CRO and BNB are also highly rated by analysts in the next crypto market cycle.

Conclusion

Although stagflation poses a significant risk, the outlook for Bitcoin and altcoins remains supported by expectations of Fed rate cuts and strong capital inflows into digital assets. By the end of 2025, Bitcoin along with standout tokens such as SOL, ENA, USDe, HYPE, CRO, and BNB are expected to maintain strong growth momentum.

Disclaimer: This article is intended solely to provide information and market insights at the time of publication. We make no promises or guarantees regarding performance, returns, or the absolute accuracy of the data. All investment decisions are the sole responsibility of the reader.