Markets have moved past debating if interest rate cuts are coming. The focus now is on how deep the Federal Reserve will go.

The US central bank is widely expected to lower its benchmark rate at next week’s meeting, with futures markets like CME FedWatch assigning a near 95% probability of a quarter-point reduction.

“Cuts are baked in,” Coinbase analysts wrote in its weekly market brief. “The weakening labor market and housing slump make a gradual policy shift unavoidable.”

Morgan Stanley analysts echoed that outlook, saying “market conditions give the Fed room to move more quickly toward a neutral policy stance.” The bank expects the Fed to follow September’s move with a series of reductions through year-end and into 2026.

This expected easing is already acting as a boon for major cryptocurrencies.

Bitcoin has been largely tracking the Nasdaq in recent months, but analysts say easier monetary policy could provide the spark for a bigger breakout.

Investors appear to agree, pouring more than $1.7 billion into US spot Bitcoin exchange-traded funds this week, their strongest haul since mid-July, SoSoValue data shows.

Sean Dawson of Derive said he expects Bitcoin to climb to $140,000 by year-end, with the potential to hit $250,000 if institutional inflows persist.

Fundstrat’s Tom Lee offered a similar view, telling CNBC it “can easily get to $200,000 before the end of the year.”Bitcoin has hit a three-week high above $116,000. Credit: CoinGecko

Still, some warn the immediate reaction may hinge on the size of the Fed’s move. “A quarter-point cut has been widely anticipated and is already priced in,” said Illia Otychenko of CEX.IO. “A larger cut would be a surprise and could act as a real shake-up.”