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As Bitcoin hovers near $60,000, analysts anticipate significant price fluctuations before the Federal Reserve's interest rate cut decision. Market dynamics could shift depending on the size of the rate adjustment, leading to potential volatility.
Bitcoin Faces Potential Volatility Before Fed's Decision
After breaking below the crucial $60,000 support level, the price of bitcoin may encounter further downward pressure in the days leading up to the US Federal Reserve's interest rate decision on September 18.
Bitfinex researchers informed Cointelegraph that the next judgment might potentially cause greater price volatility for the first cryptocurrency on the planet:
“Depending on whether the rate cut is 25 basis points or 50 basis points, market behavior could swing between bullish optimism and cautious de-risking in response to major macroeconomic adjustments. This expected volatility might be reflected in flows across ETFs and perpetual markets, which are likely to exhibit increased fluctuations.”
First Rate Cut Since COVID-19 Pandemic Expected
This forecast is made just one day before the Federal Reserve is widely anticipated to announce its first interest rate drop since the start of the COVID-19 epidemic.
A Bitcoin breakout in October is being predicted by a growing number of analysts. This breakout could be triggered by the Federal Reserve's decision to decrease interest rates.
On September 14, Bitcoin broke back above the $60,000 psychological threshold for the first time since August 30, but the very same day, it also lost the crucial support level.
Bitcoin Price May Have Bottomed Out at $52,000
What this means, according to Bitfinex's analysts, is that Bitcoin's price may have bottomed out at about $52,000:
“Our earlier view that Bitcoin's dip to $52,756 on Sept. 6 might represent a potential local bottom has been substantiated. Prices have subsequently increased by over 15 percent, supported by a significant uptick in Bitcoin ETF net inflows of $403.9 million over the past week.”
A "critical point" for the market just before the next interest rate decrease might be reached if Bitcoin prices fall to $50,000, as predicted by Bitfinex analysts.
67% Chance of 50 Basis Point Rate Cut, CME Data Shows
The most recent numbers from the CME FedWatch tool show that the chances of a 25 basis point rate drop are 33% and the likelihood of a 50 basis point rate cut are 67%.
A 25-basis-point rate decrease is more plausible, according to the Bitfinex experts, even if there has been an increase in betting on a larger cut. Furthermore, they included:
“There is slightly stronger core inflation, which we believe will make the Fed more cautious about rate cuts, and we expect a smaller 25-basis-point cut, rather than a more aggressive 50 basis point reduction.”
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