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Bitfinex analysts caution that Bitcoin could experience a potential 20% drop as the Federal Reserve’s upcoming interest rate decision introduces uncertainty into the market.
The price of Bitcoin might decline by up to 20%, according to Bitfinex analysts, who emphasize that the cryptocurrency’s future heavily depends on this month’s Federal Reserve interest rate decision.
In a research report published on September 2, analysts noted Bitcoin’s recent 32% surge, attributing it to speculation of a dovish Federal Reserve stance. They state that the anticipated rate cut could “significantly influence both Bitcoin’s short-term volatility and long-term trajectory.”
A 25 basis point cut is likely to mark the beginning of a typical easing cycle, potentially leading to long-term price appreciation for Bitcoin as liquidity increases and recession fears diminish.
However, the analysts warn that a more “aggressive” 50 basis point cut might cause an immediate price spike followed by a “correction as recession concerns escalate.”
Market Dynamics and Predictions
Over the past week, market dynamics have shifted. Spot holders are currently de-risking, while perpetual market speculators are attempting to “buy the dip,” as indicated by “significant long open interest on BTC perpetuals.”
Bitcoin’s Turbulent Month Ahead
Analysts predict that Bitcoin could face a 15-20% decline following a rate cut, with a potential bottom between $40,000 and $50,000. This forecast is based on historical data showing that cycle peaks in percentage returns typically diminish by 60-70% each cycle, alongside a reduction in average bull market corrections. However, they stress that changing macroeconomic conditions could quickly alter this outlook.
Historically, September has been a turbulent month for Bitcoin, with an average return of -4.78% and peak-to-trough declines of around 24.6%. The analysts highlight that this volatility, paired with the risk of a “sell-the-news” reaction post-rate cut, could create “both risks and opportunities for traders.”
The Federal Reserve will meet on September 17 and 18, and most analysts and experts expect an interest rate cut. However, the extent of the change remains uncertain as the U.S. economy shows signs of steady disinflation and strong consumer spending.
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