With the United States Federal Reserve (Fed) poised to implement a new monetary policy, Bitfinex analysts warn that the decision could adversely affect Bitcoin’s price.
Potential Effects of Fed Rate Cut
According to a recent report from Bitfinex, analysts claim that BTC could face a decline of up to 20% if the Fed decides to cut interest rates. The report states that the expected rate cut could significantly influence both Bitcoin’s short-term volatility and long-term trajectory. They also note that while Bitcoin is often considered as a hedge against traditional financial assets, it remains influenced by macroeconomic conditions.
15-20% Drop for Bitcoin in September
The analysts speculate that Bitcoin could face a 15-20% decline in price following a rate cut. According to historical data, cycle peaks in percentage returns typically decrease by 60-70% each time, in addition to a reduction in average bull market corrections. They project Bitcoin’s price to be around $60,000 before the rate cuts, placing the potential bottom between the low $50,000 and mid $40,000. September's historic volatility, especially for Bitcoin, could further affect market conditions. Since 2013, September typically has an average return of -4.78% for Bitcoin and peak-to-trough declines of around 24.6% since 2014.
Bitfinex Analysts' Predictions
Bitfinex analysts stressed that conditions differ in the current cycle. Bitcoin has undergone two halving events since 2019, and the global economy is not currently facing the challenges of a pandemic. Despite the warnings for September, Bitfinex analysts remain bullish for Bitcoin, adding that the volatility presents traders with both risks and opportunities.
Despite the warnings for September, Bitfinex analysts remain optimistic about Bitcoin, noting that volatility represents both risks and opportunities for traders.
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