XRP (XRP), the world’s third-largest cryptocurrency, is drawing attention as the Federal Reserve’s next policy decision approaches. According to futures traders, the Fed appears set to lower interest rates at its upcoming meeting later this month, which would mark the first cut in roughly nine months. Those same traders are also pricing in six cuts between now and the end of 2026.
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Compared with traditional stocks, the crypto market is still relatively young, making it harder to pinpoint what exactly drives token performance. Yet, much like equities, crypto prices have often been influenced by Fed rate decisions in recent years.
Investor Bram Berkowitz points out that “interest rates and other monetary actions have been highly influential for cryptocurrencies, which have more or less traded like high-growth tech stocks.”
High-growth assets usually benefit when interest rates decline, thanks to several factors; lower yields on safe assets like U.S. Treasuries push investors toward riskier options. Additionally, cryptocurrencies in particular have often moved in “inverse correlation” with the dollar, so falling rates, and a weaker dollar, can be a tailwind for the sector.
Looking back, XRP’s price history has often lined up closely with the Fed’s moves. Since its launch in 2012, the token has tended to fall when rates rise and climb when they decline. Interestingly, XRP has managed to push higher even during the current period of relatively elevated rates, supported by optimism around deregulation efforts under President Donald Trump and the market’s growing confidence that cuts are on the horizon. This backdrop suggests that while rate levels matter, broader policy and sentiment shifts can also give crypto a lift.
Based on past trends, then, Berkowitz fully expects a rate cut in September will boost XRP’s price. Still, one cut this month is only part of the picture. Markets have been anticipating five or six cuts through 2026, largely due to Fed concerns about a softening labor market. At the same time, inflation remains elevated, with Trump’s tariffs adding further pressure on consumer prices. While some view the tariff impact as temporary, the outcome is uncertain. If inflation stays high and the labor market proves resilient, Berkowitz thinks the Fed will struggle to justify that many cuts over the coming year.
That scenario would likely weigh on XRP and other growth assets, which typically underperform when interest rates remain elevated.
“So while a September cut would help XRP, investors need to carefully watch what happens during the longer term,” Berkowitz summed up. (To watch Berkowitz’s track record, click here)
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Disclaimer: The opinions expressed in this article are solely those of the featured investor. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.