Bitfinex has issued a cautionary note to Bitcoin traders, suggesting that the anticipated interest rate cut by the US Federal Reserve could negatively impact Bitcoin’s price. Contrary to market expectations that the rate cut might boost Bitcoin, analysts predict it could instead lead to a decline.
In a note dated September 2, Bitfinex analysts warned of a potential 15-20% drop in Bitcoin’s price following the Fed’s rate cut, with Bitcoin possibly falling to between $40,000 and $50,000. The analysts cited September’s historical volatility for Bitcoin as a contributing factor, noting that the anticipated Fed rate cut adds another layer of complexity that could increase market fluctuations.
“If we were to speculate, we would caution to expect a 15-20 percent decline when rates are cut this month, with a bottom of $40-50k for BTC,” the note stated.
The Fed’s interest rate decision is set for September 18, and there is optimism in the market that rates will be lowered, following dovish comments from Fed Chair Jerome Powell in August. Powell suggested that “the time has come” for such a move.
Typically, lower interest rates make riskier assets like Bitcoin more attractive, as traditional investments such as bonds and term deposits yield less. Despite this, Bitfinex’s analysts remain skeptical about Bitcoin’s prospects in the near term.
At the time of writing, Bitcoin was trading at $57,754, marking a 2.67% decrease over the past week, according to CoinMarketCap. Should the price drop by 20% as predicted, it would fall to approximately $46,000, a level last seen on February 8. Markus Thielen of 10x Research has suggested that Bitcoin needs to reach the low $40,000s before a bull market can resume.
Joe Consorti of Bitcoin Layer noted that the $60,000 level for Bitcoin is now a consolidation zone rather than a speculative peak, where long-term holders are accumulating and holding their positions.
Crypto trader Daan Crypto Trades observed that Bitcoin is “still fighting around its Bull Market Support Band” and has not yet moved decisively in either direction.
As the market awaits the Fed’s decision, Bitcoin traders face a period of uncertainty and potential volatility.