Interest rate cut dreams shattered in June? Traders are betting heavily on July, and the crypto market may finally get a long-awaited breather

A report from the U.S. Bureau of Labor Statistics has prompted the global capital markets to recalibrate their expectations for the start of the easing cycle. On February 11 local time, the January non-farm payrolls unexpectedly surged by 130,000, with the unemployment rate dropping to 4.3%. This “surprise” quickly shattered market expectations of a rate cut in June.

CME FedWatch tool shows that traders have not only significantly reduced the probability of a rate cut but more importantly—the market has fully priced in the Federal Reserve implementing its first rate cut in 2026 in July, rather than the previously widely expected June. For traders closely monitoring macro trends on Gate, this represents a significant reshaping of risk asset pricing logic.

Expectations Shift: From “Urgent” to “Patient”

Just a few weeks ago, Fed funds futures were fiercely debating whether to cut rates in March or May. However, the stronger-than-expected January non-farm payrolls (adding 130,000 vs. expected 55,000) gave the Fed more policy buffer time.

John Briggs, head of US interest rate strategy at Banque de France, commented: “The market initially entered with expectations of weak data, but the results were the opposite. Given the Fed’s focus on the labor market, expectations for rate cuts are receding.”

This shift is directly reflected in the US Treasury yield curve. The most sensitive to policy rates, the 2-year Treasury yield, jumped nearly 8 basis points to 3.53%. Many seasoned traders on Gate understand that rising yields increase the attractiveness of risk-free rates, which often leads to short-term capital outflows from risk assets like crypto.

Key Market Movements on February 12

Macro logic must translate into concrete trading data. As of February 12, 2026, according to the latest USD trading pairs on the Gate platform, the market remains in a fragile post-drop equilibrium:

• Bitcoin (BTC): Latest price $67,800. This level is a psychological battleground for bulls and bears. It briefly fell below $66,000 yesterday due to the non-farm data but has now temporarily reclaimed the $67,000 mark.
• Ethereum (ETH): Latest price $1,965. The trend is weaker than Bitcoin, currently oscillating narrowly above $1,950 with insufficient rebound momentum.
• Gate Token (GT): Performs relatively resilient, maintaining a recent consolidation range, demonstrating strong community resilience.

User sentiment on Gate also confirms this state: there is no FOMO-driven frenzy nor extreme despair-driven capitulation; instead, it’s more like a “Waiting for Godot” stance of cautious observation.

If a Rate Cut Happens in July, Where Will Funds Flow?

Tompkins Bank strategist Lee Ferridge issued a clear warning: if the Fed’s rate cuts this year exceed market expectations (currently priced in as two cuts), the dollar index could fall by 10%.

This is a crucial forward-looking signal for the crypto industry. The Gate Research Institute notes that the long-term negative correlation between the dollar and Bitcoin remains solid. Once the July rate cut window opens as expected, the appeal of dollar assets will substantially diminish. David Hernandez, a crypto investment strategist at 21Shares, pointed out that the resilience of the labor market is a reason the Fed may not need to “backstop” immediately; but conversely, once rate cuts begin, their purpose will shift from crisis response to preemptive easing—precisely the “soft landing + low interest rates” scenario risk assets favor.

However, current views from Wintermute strategist Jasper De Maere suggest that most traders no longer expect a cut in March, but the signals from the bond market show that overall expectations have not changed much. This means that the fading of June rate cut expectations and the anticipation of July have not caused market confidence to collapse but rather reflect a further digestion of the “higher for longer” rate outlook.

Key Data Outlook: Friday’s CPI Will Decide Short-Term Direction

While expectations have shifted to July, the market’s focus has not disappeared but has shifted to a new point of contention.

On February 14 (this Friday), the U.S. Department of Labor will release the delayed January Consumer Price Index (CPI). Currently, the market broadly expects year-over-year inflation to slow from 2.7% in December to 2.5%.

Derek Lim, head of research at Caladan, emphasized: “Inflation indicators are more important than employment data. If inflation comes in below expectations, it will increase pressure on the Fed to cut rates sooner.”

For traders on Gate, the current strategic framework is relatively clear:

1. If CPI is below expectations: it will reinforce the certainty of a July rate cut, possibly reigniting hopes for June. Bitcoin at $67,000 could challenge resistance at $68,600.
2. If CPI exceeds expectations: it indicates that even with a delay to July, inflation stickiness still threatens this timeline. Bitcoin could test support levels at $65,000 or even $63,000 again.

Summary

The shift of the Fed rate cut expectation from June to July is not the end of bearish signals but a phase of uncertainty clearing. Data from Gate shows that despite sharp volatility in Bitcoin and Ethereum, on-chain data indicates last week’s “capitulation sell-off” resulted in a record $3.2 billion in realized losses, a hallmark often seen at cycle bottoms.

The market has already de-levered from the “June rate cut” sentiment and is now pricing more pragmatically for July. As asset manager giants like Amundi begin reducing dollar exposure, global capital is seeking new outlets.

In this macro narrative transition, Gate continues to serve as a bridge connecting traditional liquidity contraction with emerging crypto narratives. Whether you hold BTC, ETH, or GT, staying attuned to the FOMC meeting scheduled for July 26 will be key to trading profits in the first half of 2026.