The long-anticipated interest rate cut by the United States Federal Reserve could trigger a surprising downturn in Bitcoin’s price, contrary to widespread expectations. Analysts warn that the Fed’s decision, expected on September 18, might lead Bitcoin (BTC) to plummet to levels not seen since February, potentially down by as much as 15-20 percent.
According to a September 2 note from Bitfinex 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.” This forecast highlights the unpredictable nature of September for Bitcoin, historically a volatile month for the cryptocurrency. The anticipated Fed rate cut adds an extra layer of complexity, which could further exacerbate market volatility.
Investors are hopeful that the Fed will lower rates following dovish comments from Fed Chair Jerome Powell in August, who suggested that “the time has come” for a rate adjustment. Typically, a reduction in interest rates makes traditional assets like bonds and term deposits less appealing, thereby making riskier assets such as Bitcoin more attractive. However, the current market dynamics may lead to a counterintuitive outcome.
At present, Bitcoin is trading at $57,754, reflecting a 2.67% drop over the past week, according to CoinMarketCap data. Should a 20% decline materialize, Bitcoin’s price could fall to around $46,000—a level last seen on February 8. This price point is critical, as Markus Thielen, head of research at 10x Research, noted earlier this month. Thielen suggested that Bitcoin needs to reach these lower levels before a potential bull run can begin, aiming for prices in the low $40,000s to time the next bull market effectively.
Joe Consorti, a Bitcoin Layer analyst, also weighed in on the market sentiment. In a September 3 post on X, Consorti stated, “$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.” This perspective underscores a shift in market behavior, where stability at higher price levels might indicate a period of accumulation rather than speculative frenzy.
Adding to the complexity, crypto trader Daan Crypto Trades observed that Bitcoin is “still fighting around its Bull Market Support Band,” suggesting indecision in its price movement. “Doesn’t seem to want to move away from it to either side at this point,” he noted.
As the Fed’s rate cut decision looms, Bitcoin traders and investors must brace for potential turbulence. While lower interest rates could theoretically boost Bitcoin’s appeal, the current market’s historical volatility and uncertainty surrounding the Fed’s actions might drive the cryptocurrency toward a significant decline, challenging the prevailing optimism.
Disclaimer: The information in this article is for general purposes only and does not constitute financial advice. The author’s views are personal and may not reflect the views of Chain Affairs. Before making any investment decisions, you should always conduct your own research. Chain Affairs is not responsible for any financial losses.
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