A recent report from Bitfinex Alpha warns that Bitcoin may face significant price volatility following the expected U.S. interest rate cut by the Federal Reserve.
Bitcoin Price Fluctuations Following the Fed Meeting
Bitfinex suggests that investor expectations regarding the Federal Reserve’s decision on U.S. interest rates will likely influence Bitcoin’s price volatility. The Fed will meet on September 17-18 to decide on the interest rates, which currently range from 5.25% to 5.5%.
Investors anticipate a decrease in the interest rate, with the Fed possibly cutting rates by 25-50 basis points. A 25-basis point cut could encourage bullish sentiment among investors. However, a 50-basis point cut or larger may prompt more cautious behavior among investors.
Short-term sell-offs in stocks and other risky assets often follow such rate cuts. Investors might reduce their exposure to Bitcoin and other cryptocurrencies, leading to increased market volatility.
Bitfinex highlights that if Bitcoin fails to break through the $61,000 resistance level after the rate announcement, traders and investors should prepare for rapid and significant price movements in the near future.
Bitcoin Price Volatility Expected Throughout September
Analysts expect this high volatility to persist through the end of September. However, overall market sentiment remains more positive compared to August, when recession fears were rising.
Bitcoin has also shown increased correlation with equities, indicating that movements in traditional financial markets are increasingly affecting Bitcoin’s price.
Additionally, Bitcoin has decoupled from gold, which hit record highs last week, suggesting that investors are shifting away from traditional safe-haven assets amid risk-averse market conditions.
According to Bitfinex, Bitcoin’s price outlook will become clearer towards the end of 2024, as the U.S. presidential election approaches.
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