Would a Jumbo-Sized Rate Cut Spike Inflation and Serve s ‘Jet Fuel’ for Crypto?

July 9, 2025

Markets

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By Siamak Masnavi, CD Analytics|Edited by Aoyon Ashraf

Updated Jul 9, 2025, 7:59 p.m. Published Jul 9, 2025, 5:20 p.m.

BTC chart shows steady recovery toward $109,343 after Trump post
  • The bitcoin price started surging within 30 minutes of Trump calling current Fed rate 300 bps too high.
  • The Kobeissi Letter says such a rate cut could push S&P 500 to 7,000 and gold to $5,000. It also warns of inflation rising above 5% and a potential 25% jump in U.S. home prices.

Bitcoin surged to $109,343 on July 9, up 0.8% over the prior 24 hours, according to CoinDesk Research’s technical analysis model.

In a Truth Social post at 10:00 a.m. ET, Trump declared that the U.S. federal funds rate is “at least 3 points too high,” referring to a 300 basis point (3%) cut. He argued that delaying such a move imposes an annual burden of $360 billion on refinancing costs. Within 30 minutes, BTC began rising steadily as traders appeared to price in the short-term implications of such a dramatic policy shift, including the potential for renewed liquidity and risk-on sentiment.

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In a comprehensive thread on X, macro analysts at The Kobeissi Letter provided a detailed breakdown of Trump’s claim. According to their analysis, total U.S. interest payments have already reached $1.2 trillion over the past 12 months—equivalent to $3.3 billion per day.

They noted that while Trump’s math assumes $360 billion in savings per percentage point across $36 trillion in national debt, only about $29 trillion is held publicly and would be affected by rate changes. Under more realistic assumptions, they estimate that a full 300 bps cut applied gradually could reduce interest expense by roughly $174 billion in the first year, potentially totaling $2.5 trillion over five years if 20% of the debt is refinanced annually.

Despite these potential savings, the report warned that the broader economic consequences of a 3% cut would be historic. No single Fed rate cut in modern history has exceeded 100 basis points — even during the 2008 crisis or the March 2020 emergency move. Implementing a 300 bps reduction outside of a recession, in an economy growing at 3.8% annually, would be unprecedented.

The Kobeissi Letter cautioned that such a move would likely reignite inflation above 5%, trigger a steep drop in the U.S. dollar — potentially exceeding 10% — and cause housing prices to surge due to a sharp decline in mortgage rates. Asset markets would likely rally in the short term, with gold forecasted to hit $5,000, oil above $80 per barrel, and the S&P 500 breaching 7,000. However, they emphasized that the long-term consequences would be destabilizing without major reductions in U.S. government spending.

For Bitcoin, the implications are clear: a sudden drop in interest rates would be viewed as monetary stimulus, likely accelerating capital inflows into hard assets and alternative stores of value like BTC. While analysts continue to debate the likelihood of such cuts, the market’s immediate reaction suggests investors are positioning for upside risk.

Technical Analysis Highlights

  • The BTC price moved sharply within 30 minutes of Trump’s Truth Social post at 10:00 a.m. ET.
  • Consolidation persisted earlier in the day, but buying volume increased significantly after Trump’s rate comments.
  • Price tested resistance near $109,761, with higher lows forming above $108,500, indicating bullish structure.
  • Bollinger Bands compressed to their tightest levels in this cycle, historically a signal of pending breakout.
  • Institutional accumulation remains visible via volume clusters near support zones around $108,500–$108,600.

Disclaimer: Parts of this article were generated with the assistance from AI tools and reviewed by our editorial team to ensure accuracy and adherence to our standards. For more information, see CoinDesk’s full AI Policy.

Siamak Masnavi is a researcher specializing in blockchain technology, cryptocurrency regulations, and macroeconomic trends shaping the crypto market. He holds a PhD in computer science from the University of London and began his career in software development, including four years in the banking industry in the City of London and Zurich. In April 2018, Siamak transitioned to writing about cryptocurrency news, focusing on journalism until January 2025, when he shifted exclusively to research on the aforementioned topics.

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CoinDesk Analytics is CoinDesk’s AI-powered tool that, with the help of human reporters, generates market data analysis, price movement reports, and financial content focused on cryptocurrency and blockchain markets.

All content produced by CoinDesk Analytics is undergoes human editing by CoinDesk’s editorial team before publication. The tool synthesizes market data and information from CoinDesk Data and other sources to create timely market reports, with all external sources clearly attributed within each article.

CoinDesk Analytics operates under CoinDesk’s AI content guidelines, which prioritize accuracy, transparency, and editorial oversight. Learn more about CoinDesk’s approach to AI-generated content in our AI policy.

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