Bitcoin has been volatile lately, falling to $57,100 on Monday, a far cry from its high of $65,000 in late August. But the Federal Reserve may cut interest rates, which could have a bigger impact on Bitcoin prices.
According to the Bitfinex Alpha report, if the Fed cuts interest rates by 25 basis points in September, Bitcoin may rise in the short term, but may fall in the long term. If the rate cut is larger, such as 50 basis points, Bitcoin may rise first and then fall. The current market situation is that some people are avoiding risks, while others are looking for opportunities to buy at the bottom. But the report also reminds us that the rate cut may cause the price of Bitcoin to fall by 15% to 20%, possibly to between $40,000 and $50,000.
Moreover, historically, the price fluctuations of Bitcoin in September are usually large, with an average return rate of negative, and the decline is usually around 24.6%. Now that Bitcoin is increasingly closely related to the traditional financial market, its trend will also be affected by the macro economy.
Impact of global economic dynamics on the market outlook
Global economic dynamics are also affecting Bitcoin. For example, the European Central Bank may pause its interest rate hikes, Japan is cautious about China's recovery, and some measures of the People's Bank of China may have an impact on the cryptocurrency market.
Although the U.S. economy shows some signs of deflation, household consumption remains strong and wage growth has outpaced inflation. The Fed's preferred inflation measure, the personal consumption expenditures index, rose 2.5% in July, supporting the argument that the economy is stable.
Meanwhile, the second quarter GDP growth rate in the United States was revised upward to 3%, showing a strong economic recovery. However, the situation in the real estate market is not so optimistic. Although mortgage rates have fallen, the number of homes for sale has hit a record low.
Encryption policy and compliance promotion
Trump, on the other hand, has proposed a strategy to make the United States take the lead in the field of cryptocurrency, especially strengthening cooperation with the decentralized financial project World Liberty Financial. It also shows that he is actively promoting relevant policies in the field of cryptocurrency.
At the same time, 24X National Exchange has proposed an idea to establish a 24x7 trading platform for cryptocurrency ETFs and is awaiting regulatory approval in the hope of allowing more people to participate in the market. These dynamics show the active and changing dynamics of the cryptocurrency market.
Conclusion:
The Bitcoin market is facing uncertainty as the Federal Reserve’s possible decision to cut interest rates approaches. Bitfinex Alpha’s report reminds us that while there may be price volatility in the short term, in the long term, interest rate cuts could lead to significant price declines in Bitcoin.
In addition, global economic dynamics and challenges in the U.S. real estate market have also added complexity to the cryptocurrency market. Against this backdrop, investors need to remain vigilant and pay close attention to market dynamics to make wise investment decisions.
What do you think about Bitcoin’s price action after the Fed’s rate cut? Do you think the changes in global economic dynamics and cryptocurrency market activity will affect the cryptocurrency market? Leave your thoughts in the comments!
