The price of Bitcoin might decline significantly. Bitfinex analysts say that the price of the cryptocurrency could drop by as much as 20% based on what the Federal Reserve does next with interest rates.
Analysts wrote in a study report released on September 2 that Bitcoin’s recent 32% rise was mostly due to rumors that the Fed would take a “dovish” stance. They do warn, though, that the expected rate cut could have an enormous impact on Bitcoin’s price fluctuations and long-term direction.
According to the story, a sudden 50 basis point cut could cause prices to go up at first, but they might go down again as fears of a recession grow. In the past few days, the market has changed.
Bitcoin Traders Brace For Volatility
People who hold spot are starting to reduce their risk, while traders in the perpetual market are trying to “buy the dip,” as shown by their large long positions in BTC perpetual contracts.
Analysts think that after a rate cut, Bitcoin’s value could drop by 15 to 20 percent, with a possible low point between $40,000 and $50,000.
This prediction comes from looking at past data that shows cycle peaks are getting fewer and that average bull market declines are getting less extensive too. But they also know that changes in the overall economy could quickly change this picture.
In the past, September has been a very unstable month for Bitcoin, with average losses of -4.78% and drops of about 24.6% from high points to low points. These changes, along with the chance of a “sell-the-news” response after a rate cut, the analysts say, could give traders both risks and opportunities.
There will be a meeting of the Federal Reserve on September 17 and 18. Most experts think that interest rates will be lowered. But it’s still not clear just how significant the change really is because the U.S. economy is still showing signs of steady deflation and high consumer spending.
