ChainCatcher news, Bitfinex released a report saying, “This month’s Federal Reserve interest rate decision is expected to significantly affect the short-term volatility and long-term trend of Bitcoin. Since the beginning of August, Bitcoin has risen by more than 32%, mainly driven by traders’ expectations that the Federal Reserve will A 25 basis point rate cut could mark the start of a typical easing cycle, which could lead to longer-term Bitcoin price gains as liquidity increases and recession fears ease. A steep rate cut could lead to a surge in Bitcoin's immediate price, but it could be followed by a pullback as recession fears intensify. Over the past week, we have seen spot holders reducing risk while speculators in the perpetual contract market. In an attempt to 'buy the dip', we continue to observe significant long open interest on Bitcoin perpetual contracts.
If we were to make a prediction, we would warn that a 15-20% drop could occur when the rate cut occurs this month, with the bottom for Bitcoin likely to be between $40,000 and $50,000. This is not an arbitrary number, but is based on the fact that the peak percentage returns per cycle are decreasing by about 60-70% and the average bull market retracements are also decreasing. But this logic could be easily negated if macroeconomic conditions change. These are uncertain times for traders.
September has historically been a volatile month for Bitcoin, with an average return of -4.78% and a typical peak-to-trough drawdown of about 24.6%. This volatility, combined with the potential for a ‘sell the news’ reaction following a rate cut, could present both risks and opportunities for traders. Meanwhile, Bitcoin’s increased correlation with traditional risk assets, such as the S&P 500, suggests its price movements will be closely tied to global macroeconomic conditions. Actions by other major central banks, such as the ECB’s potential pause in rate hikes amid slowing growth and the Bank of Japan’s cautious approach amid a slow economic recovery, could have ripple effects on global markets and impact digital assets like Bitcoin.”
