- The Federal Reserve made a decisive decision to cut interest rates by 50 basis points, officially ending a long period of monetary tightening.
- This change opens the door to a new phase of growth for crypto, as market conditions become more favorable for risky assets, according to Tide Capital, a digital asset investment and trading firm.
The end of the squeeze: a turning point for crypto
The 50 basis point rate cut marks a critical point for markets, signaling the end of the Fed’s restrictive policy that began in early 2022. Tide Capital interprets this as a clear opportunity for investors to capitalize on the renewed optimism surrounding risky assets. The firm notes that the rate cut has boosted market confidence, leading to notable gains in traditional markets like U.S. stocks and gold, as well as a strong rally in cryptocurrencies.
After several months of consolidation between $50,000 and $70,000, Bitcoin is likely on the verge of a breakout, according to analysis from Tide Capital. Although some short-term volatility may occur due to factors such as the upcoming US elections, the overall trend points to a sustained uptrend. Tide Capital expects any potential decline in the price of BTC to be minimal, given the favorable macroeconomic conditions created by the Fed’s policy change.
Stablecoins Soar and Capital Returns to Crypto
Tide Capital highlights the growing supply of stablecoins as a key indicator of renewed interest in the crypto market. Since the beginning of September, stablecoin reserves have increased by $3 billion, indicating that capital is once again flowing into digital assets. Compared to the previous year, the supply of stablecoins increased by $50 billion, approaching all-time highs.
During the Fed’s tightening cycle, rising short-term interest rates led to capital outflows from the crypto space as investors sought safer returns. Now, with falling rates, investors are finding the reduced opportunity cost more attractive, leading to greater inflows into cryptocurrencies. Tide Capital views this trend as a clear signal of growing confidence in the digital asset market, positioning the sector for further gains.
Altcoins and Meme Coins start to outperform
While Bitcoin remains the center of market attention, Tide Capital notes that altcoins are starting to eclipse BTC in terms of performance. Since the Fed rate cut, the dominance of altcoins has increased, with many showing stronger growth than Bitcoin itself. The growing appetite for risk in the crypto market has prompted many investors to explore altcoins with high potential.
Meme pieces, in particular, have grown in popularity. Tide Capital highlights the remarkable rise of Neiro, a meme coin that rose 30x after being listed on Binance in mid-September. This rise reflects a broader trend of meme coins boosting market sentiment and generating substantial returns for investors.
As meme coins continue to captivate market participants, Tide Capital suggests that they could offer attractive investment opportunities due to their low valuation and high potential for explosive growth, especially compared to more digital assets. established.
Second spring of DeFi: Aave leads the charge
The transition to a falling rate environment is also expected to reignite interest in DeFi (decentralized finance), with older protocols like Aave potentially benefiting. Tide Capital suggests that as borrowing costs fall, investors will increasingly seek yield opportunities in DeFi, including through stablecoin staking and other high-yield mechanisms.
Aave, which has maintained a strong track record of security and strong performance since its launch in 2020, is well-positioned to lead this resurgence. With its TVL (total value locked) reaching $12.5 billion, Aave remains the leading multi-chain lending protocol. Tide Capital highlights Aave’s impressive organic growth, noting that its monthly active user count recently reached an all-time high and that its revenue continues to exceed expectations despite broader market challenges.
Sui: the new star among public blockchains
Tide Capital also draws attention to the impressive growth of Sui, a next-generation public blockchain that has outperformed its peers in recent months. Sui’s token, $SUI, has surged more than 200% from its August low, closing in on its all-time high set in March.
Institutional interest in Sui is growing rapidly. In September, Grayscale launched a Sui trust fund and Circle announced plans to introduce native USDC to the Sui network, further strengthening the ecosystem. According to Tide Capital, these developments have attracted significant capital to Sui, with TVL increasing from $25 million to $960 million in just one year.
“Sui’s growth trajectory is unmatched in today’s market and its potential remains largely untapped,” says Tide Capital. “With its fully diluted valuation (FDV) of $16 billion, Sui offers considerable upside potential compared to more established blockchains like Solana, whose FDV is approaching $90 billion.”
