FED Interest Rate Cut Affecting Bitcoin (BTC) Price?

Bittime - Whether Will the United States Federal Reserve (Fed)'s steps in cutting interest rates affect Bitcoin prices? This question is not just casual conversation. Rather, it is a complex puzzle that could determine the investment fate of millions of people around the world.

September, a month historically known as a gloomy time for Bitcoin, is now getting extra attention. Analysts from Bitfinex have conducted an in-depth analysis of how a potential interest rate cut by the Fed could change the face of the Bitcoin market.

Two Scenarios of the Effect of the FED's Interest Rate Cut on Bitcoin

In their weekly report, Bitfinex Alpha, Bitfinex analysts lay out two possible scenarios:

25 Basis Point Cut 

If the Fed chooses a more conservative step by cutting interest rates by 25 basis points, we may witness a “selling the news” phenomenon in Bitcoin early on. However, after this initial wave subsides, Bitcoin is predicted to start a gradual upward trend. 

"A 25 basis point cut could signal the start of a typical easing cycle," said one analyst. "This could drive long-term Bitcoin price appreciation as liquidity increases and fears of a recession diminish."

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50 Basis Point Cut 

This more aggressive scenario could trigger a sudden spike in Bitcoin prices. However, analysts warn that this euphoria may only be temporary. 

"This increase will likely be followed by a correction," they explained. "As we have seen in the past, aggressive interest rate cuts initially boost prices, but economic uncertainty often slows that upward momentum."

Bitcoin's New "Bottom" Potential: Between IDR 620 Million to IDR 775 Million?

Even though September is known as a volatile month for Bitcoin, and the crypto's link to global macroeconomic trends is getting stronger, Bitfinex analysts made quite a surprising prediction. 

They estimate that Bitcoin could experience a decline of 15-20% after the Fed's decision, with a potential "bottom" (lowest price) in the range of IDR 620 million to IDR 775 million.

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"This is not a number taken haphazardly," stressed one analyst. "This prediction is based on historical data showing that cycle peaks in percentage returns typically decline 60-70% each cycle, with bull market corrections decreasing on average."

However, they also reminded that this outlook could change quickly if macroeconomic conditions experienced significant changes.

Bitcoin Long-Term Optimism

Interestingly, amidst these bearish short-term projections, Bitfinex analysts maintain a bullish outlook for Bitcoin in the long term. This shows their confidence in the durability and growth potential of the world's largest cryptocurrency.

Conclusion

For investors and crypto enthusiasts, this analysis presents a complex but interesting picture of Bitcoin's future. On the one hand, there is a potential short-term decline that needs to be watched out for. But on the other hand, the long-term prospects remain promising.

What is clear, in the next few weeks, the eyes of the crypto world will be on the Fed and the market's reaction to their decisions. For those diving into the world of crypto, this is a moment to remain vigilant, but also ready to take advantage of opportunities that may arise.

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Learn How to Buy Crypto on Bittime.

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