Analysts Expect Fed Rate Cut to Hurt Bitcoin
04 Sep, 2024 ● Crypto News
A long-awaited interest rate cut from the U.S. Federal Reserve might cause the price of Bitcoin to drop, contrary to many market participants' expectations, and could push it to levels not seen since February, according to analysts.
“If we were to speculate, we would caution to expect a 15-20 percent decline when rates are cut this month, with a bottom of $40-50k for BTC,” Bitfinex analysts stated in a note on September 2.
The analysts supported their view by pointing out that September has traditionally been a “volatile month” for Bitcoin, and the upcoming Fed rate cut adds another “layer of complexity, potentially exacerbating the market’s volatility.”
“This logic could be negated quite easily if macroeconomic conditions change,” they added. The note also emphasized that “these are uncertain times for traders.”
The Fed's decision on interest rates is expected on September 18, with optimism in the market for a rate cut following dovish remarks from Fed Chair Jerome Powell in August, where he stated that “the time has come.”
Investors often find riskier assets like Bitcoin more appealing when interest rates are reduced, as traditional assets such as bonds and term deposits become less attractive.
At the time of writing, Bitcoin was trading at $57,754, down 2.67% over the past week, according to CoinMarketCap data.
A 20% decline from the current price would bring Bitcoin to around $46,000, a level it last reached on February 8.
Markus Thielen, head of research at 10x Research, has indicated that this is the price Bitcoin needs to hit before a new bull run can begin.
In early August, Thielen remarked, “To ideally time the next bull market entry, we aim for Bitcoin prices to fall into the low 40,000s.”
On September 3, Joe Consorti, an analyst at The Bitcoin Layer, wrote in a post on X that “$60,000 is no longer a blow-off top level dominated by speculators, it is a consolidation zone where long-term, mature holders accumulate and HODL.”
Meanwhile, crypto trader Daan Crypto Trades commented that Bitcoin is “still fighting around its Bull Market Support Band,” adding that it “doesn’t seem to want to move away from it to either side at this point.”
Sources:
https://cointelegraph.com/news/federal-reserve-rate-cut-bearish-bitcoin-price-bitfinex-analysts
https://blog.bitfinex.com/wp-content/uploads/2024/09/Bitfinex-Alpha-120.pdf
https://coinmarketcap.com/currencies/bitcoin/
