Analyst: The Federal Reserve's expected rate cut in May may benefit the cryptocurrency market

ChainCatcher news, according to The Block, research director of the ETC Group André Dragosch stated that based on the current pricing of Federal Reserve fund futures, market participants expect the Fed to begin a rate-cutting cycle in May. Dragosch noted that the outlook for long-term rising interest rates and the latest U.S. employment data could "paradoxically increase the likelihood of an earlier rate cut." Dragosch said, "I believe that an increase in systemic risk within the banking system and/or a significant rise in unemployment could trigger a reversal in monetary policy."

"The longer the Fed maintains interest rates at current levels, the more likely we are to see some kind of 'surprise' or credit event occurring within the regional banking system, especially among institutions with significant exposure to U.S. commercial real estate." He added, "I think the pressure that bank stocks, such as New York Community Bank, have recently faced illustrates this point well."

Dragosch expects that the crypto market may have a delayed reaction to the rate cuts, with Bitcoin and other cryptocurrencies initially facing sell-offs until conditions improve in May.