XRP could be poised for a significant rally if the United States Federal Reserve moves forward with its anticipated interest rate cuts. Speculation about monetary policy shifts has already stirred the crypto markets, and analysts — including AI tools like ChatGPT — point to a potentially bullish outlook for Ripple’s native token.

How Fed Rate Cuts Could Fuel XRP

During a recent speech at Jackson Hole, Federal Reserve Chair Jerome Powell hinted at the possibility of cutting interest rates as early as September. This subtle signal was well-received by investors, sparking renewed interest in high-risk assets, including cryptocurrencies. The crypto market had just endured a week-long correction that saw Bitcoin fall below $112,000 and Ethereum recede under $4,100. XRP also plunged beneath $2.80, marking a low for the past few weeks.

Though Powell didn’t explicitly promise a rate cut at the upcoming FOMC meeting, market sentiment quickly shifted. Billions flooded back into the crypto space, pushing Bitcoin briefly above $117,000 and Ethereum to a record high of nearly $4,900, as noted in this Ethereum price surge.

Predictions for a September rate cut gained even more traction on platforms like Polymarket, where probability jumped from under 60% to nearly 80% within a matter of hours. While attention initially focused on Bitcoin and Ethereum, as this coverage illustrates, XRP is now entering the spotlight.

ChatGPT weighed in on the matter and emphasized that lower interest rates mean cheaper borrowing and easier money flow, typically benefiting speculative assets. Historically, such environments have inflated values across stocks, precious metals, and cryptocurrencies alike.

For XRP, this could translate to increased attention and capital inflows from traders reallocating away from more mainstream options like Bitcoin. ChatGPT further explained that while Bitcoin often responds first to a weakening US dollar, altcoins like XRP eventually catch up — and sometimes with explosive gains once the money begins rotating.

Spotlight on ETFs and Exposure Risks

There are currently about ten open applications for spot XRP exchange-traded funds (ETFs), sparking speculative excitement in Ripple’s investor community. Approval for such ETFs, especially alongside falling interest rates, could serve as a powerful catalyst. ChatGPT noted that institutional investors may find crypto ETFs more appealing if traditional yield-bearing assets like Treasury bonds become less attractive in a low-rate climate.

“A lower interest rate environment makes yield-bearing Treasuries less attractive. Institutions may look harder at crypto ETFs (including pending XRP ETF filings) as a way to diversify.

If an XRP ETF is approved around the same time, rate cuts could supercharge inflows.”

However, the AI model also flagged some cautionary notes. If the rate cuts result from looming recession fears, investors may initially shy away from risk-heavy assets like XRP. In such a scenario, coins across the board could temporarily suffer until economic optimism returns.

Still, based on its analysis, ChatGPT maintained a favorable view of XRP for the medium term should the Fed proceed with cuts. It noted that the combination of enhanced liquidity, a weakened dollar, and increased interest in alternative investments typically works in the asset’s favor.

Bullish Medium-Term: Fed rate cuts are generally positive for XRP because they boost liquidity, weaken the dollar, and increase demand for alternative assets.

Catalyst Combo: If rate cuts coincide with an XRP ETF approval or favorable legal clarity, XRP’s upside could accelerate toward — or beyond — its all-time high.”

Related: XRP Price: $12M Max Pain for Bears

Blockchain-based payments and cross-border XRP activity could accelerate with Federal Reserve policy shifts.