Bitcoin price remains under pressure as September approaches, with Fed rate cut odds nearing 90%. Historical data shows that rate cuts can lead to both price surges and sharp sell-offs.
Fed Rate Cuts and Bitcoin Price Risk Are Related
Bitcoin's reaction to Fed rate cuts varies across cycles. In 2019, the price increased from $3,000 to $13,000 ahead of the first cuts. Each cut triggered a brief rally, but the price weakened later in a cycle traders call "pump into, dump out".
Weak Liquidity and Bond Market Stress Also Have Roles To Play
The current Bitcoin price setup in 2025 looks weaker than in past years. ETF inflows have slowed, and large corporate buyers are retreating. At the same time, credit markets are under stress. Central banks reduced rates multiple times, but bond yields are at 30-year highs, draining liquidity and leaving less for risk-on assets like Bitcoin.
Bitcoin Setup in September Might Be True to History
Bitcoin is consolidating around $118,000. A price surge leading into the Fed meeting could result in a dump, reflecting the 2019 pattern. If price stays flat or declines before the cut, it could provide support. A key focus for traders is the $118,000-$120,000 zone, where clearing resistance could open paths for new highs.
Overall, Bitcoin risk is high. Fed rate cuts may trigger short-term pumps, but weak liquidity and strained credit markets raise the likelihood of subsequent dumps.
