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Potential for Bitcoin volatility caused by rate cuts is quite high

Bitcoin (BTC) faces potential price volatility this week as the Federal Reserve (Fed) is likely to cut the US interest rate by at least 25 basis points (bps), according to the latest “Bitfinex Alpha” report.

However, the movement depends on whether the Fed will cut 25 bps or 50 bps, as a smaller cut could trigger “bullish optimism.” In contrast, a more significant cut will likely make investors go with a “cautious de-risking.”

Bitfinex analysts highlighted that this volatility might be more evident in inflows across spot Bitcoin exchange-traded funds (ETF) and derivatives markets.

Moreover, rate cuts are often followed by a sell-off in equities and other risk assets on the near team, which adds to investors’ cautious stance. Yet, the report points out that these past patterns provide guidance but are not fail-proof to predict future behavior.$BTC $ETH $USDC