Big Bitcoin Rally Expected in 6 Months After Fed Rate Cut
The crypto world anticipates the Federal Reserve's (Fed) rate drop announcement on September 18. Bitcoin (BTC) and the financial landscape are at risk. This is the first central bank rate drop since the Fed reduced its main rate to near zero in March 2020 during the COVID-19 epidemic.
Will 50bps Cut Push Bitcoin Higher?
According to CME Group's FedWatch tool, markets are pricing in a 59% likelihood of a half-point rate decrease and a 41% possibility of a quarter-point cut. Most predict the Fed to slash 100 basis points by 2024, with over 60% expecting 125.
Investors expect at least one or two large rate cuts in the three remaining Fed meetings of the year, beginning with this week's announcement.
The crypto industry debates the impact of a 50 basis point decrease. Crypto Rover, a market specialist, believes such a decrease may launch a Bitcoin bull run and create “super bullish” circumstances.
Analyst Lark Davis remembers how Bitcoin rose after rate decreases and predicts that if history repeats, the biggest cryptocurrency might rise significantly in the next 6-12 months.
Crypto Market Optimism vs. History
However, the analyst warns of short-term holders profit-taking and a market dump, proposing a “sell the news” scenario that might disappoint investors before the market stabilizes and grows.
Technical expert Justin Bennett gives a more cautious historical view. He suggests a repeat of 2007's Nasdaq 100 Index retracement following the Fed's rate reduction, which might happen in 2023.
Bennett's study implies that present market circumstances may replicate prior downturns, casting doubt on certain digital asset market forecasts.
On Monday, NewsBTC highlighted crypto expert Doctor Profit's study, which showed market division on the rate decrease, with equal odds of a 0.25% or 0.50% reduction.
The expert favors the greater decrease, claiming that inaction might cause instability like “Blood Monday” on August 5, when Bitcoin plummeted to $48,900.
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