A much-anticipated interest rate cut by the United States Federal Reserve could send Bitcoin's price plunging, contrary to the expectations of many market participants. Analysts suggest the move could result in a significant downturn for the cryptocurrency, potentially dropping to levels not seen since February.
According to a Sept. 2 note from analysts at Bitfinex, the price of Bitcoin (BTC) could decline by as much as 15-20% if the Fed cuts rates this month. They predict a possible bottom range of $40,000 to $50,000 for Bitcoin. The analysts also highlighted that September is historically a volatile month for the cryptocurrency market, and the anticipated rate cut could further amplify this volatility.
"These are uncertain times for traders," the analysts warned, adding that while the Fed’s decision could have a major impact, the outcome may change if broader macroeconomic conditions shift. The Federal Reserve is expected to make its interest rate decision on Sept. 18, following dovish signals from Fed Chair Jerome Powell, who in August hinted that the time for a rate cut might have arrived.
Traditionally, rate cuts make riskier assets like Bitcoin more attractive to investors, as returns on traditional assets such as bonds and deposits decrease. However, the potential for increased volatility during this period is giving some experts pause.
At the time of writing, Bitcoin is trading at $57,754, down 2.67% over the past week, according to data from CoinMarketCap. A 20% drop from the current price would place Bitcoin around $46,000, a level it last reached on Feb. 8. Markus Thielen, head of research at 10xResearch, suggested that this could be the point where a new bull market begins, as he previously indicated that prices would need to dip into the low $40,000s for ideal entry points into the next market rally.
On a more optimistic note, Joe Consorti, an analyst at The Bitcoin Layer, remarked on Sept. 3 that the $60,000 mark has evolved from a speculative peak into a consolidation zone where long-term holders are accumulating Bitcoin. Meanwhile, crypto trader Daan Crypto Trades observed that Bitcoin is currently hovering around its Bull Market Support Band, with little indication of a decisive move in either direction.
With the Federal Reserve’s decision looming, the crypto market is watching closely to see whether Bitcoin will weather the potential storm or face a significant downturn.
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